Does the concept of “Tier 1 Luxury” have a future?

August 10th, 2011

If you follow the luxury segment of the automobile business in the US, then you know that the best and most powerful brands are those considered to be “Tier 1.”  They represent the largest volume brands in the segment, have the most loyal customers, command the highest margins, have the highest resale values, are the best defined, are the most prestigious and the most desirable.

Every Tier 2 brand aspires to be in Tier 1.  Audi set the target years ago to become a Tier 1 brand and some would say that it has achieved that goal.  More recently Cadillac has made no bones about the fact that it wants to be a Tier 1 brand and has set it sights on BMW.  Infiniti is striving to make it into Tier 1 and Jaguar would like to return.  The fact remains that only Mercedes-Benz, BMW and Lexus have achieved the volume, credibility and prestige to be true Tier 1, everyone else is Tier 2:

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That said, I think the goal of becoming a Tier 1 brand may be a fool’s errand in today’s luxury segment.  It made sense almost 20 years ago when Audi set that as the target but does it really make sense today?

Tier 1 is full of accepted conventions that must be present in order for the brand to be truly Tier 1.  For example, in the Tier 1 world, all dealerships must be exclusive and should be Taj Mahals built to reflect the prestige and loftiness of the brand they represent.  In these Taj Mahal dealerships, customers must be served lattes, have a customer experience befitting their level of success and certainly not have that experience sullied by the presence of mass market product or customers.  In Tier 1, as defined today, manufacturers must offer three sizes of sedans, at least two cross-overs, a sports car as well as a tuner division that churns out high performance model variants.  In traditional Tier 1, it is essential to have a D-segment (think MB S-Class, BMW 7-Series, Audi A8) sedan that represents the brand’s ultimate execution of a luxury vehicle.  It’s pretty rarified air up in Tier 1, but if you can get there, profits and volumes are huge.

Here’s the rub, the whole Tier 1 paradigm has been built around the baby boomer generation and I can’t help but wonder if the conventional thinking about Tier 1 runs the risk of taking a manufacturer down a path that will be less relevant in the future.  Read the rest of this entry »

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Posted in Auto manufacturers, Automotive Retail, Strategy | 41 Comments »

Porsche’s “Everyday Magic” campaign. What were they thinking?

April 8th, 2011

Years ago, the enthusiast crowd and many industry observers were appalled at Porsche’s introduction of the Cayenne. Clearly an effort to build volume and profit for the company, many feared an SUV would destroy the Porsche brand.

The naysayers (me included) were wrong. The Cayenne has gone on to be the brand’s biggest seller and I think it’s fair to say that the 911 just keeps cruising along as one of the world’s premier sports cars. One of the reasons that the Cayenne did not damage the Porsche brand was that Stuttgart was incredibly clear that the Cayenne would be the “Porsche of SUVs,” in other words, a high performance SUV. Jeff Zwart (a Porsche factory driver as well as commercial director) directed, participated in and produced this Cayenne introductory video for Porsche:

Road to Cayenne

Obviously, the sole purpose of this video was to establish the Cayenne’s performance credentials and lineage.  Porsche successfully expanded volume by introducing a product true to the brand’s core values and marketed it successfully based on those values.  In fact you could argue that Porsche is doing exactly the same thing with the Panamera (introducing the “Porsche of four door sedans”).  We could debate whether the world needs another high performance sedan given Audi’s S models, BMW’s M series and Mercedes-Benz AMG models, but so far Porsche Panamera sales indicate that from a product point of view, Porsche judged the market well.

Porsche has successfully proven that it can expand volume by carefully developing line extensions that reflect the brand’s core value of performance.

So why, would they allow their latest marketing campaign to go so far afield?  What would possess them to feature the iconic 911 and the very successful  Cayman in communications designed to demonstrate that they are not “just” high performance sports cars, rather they are excellent everyday drivers:

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Do the marketing folks at Porsche really think that a perception of a lack of everyday utility is holding back sales of 911s? Really? Read the rest of this entry »

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Posted in advertising, Branding, Strategy | 46 Comments »

2011 New York Auto Show Press Conference Schedule

April 7th, 2011
Wed., April 20 Company Location
7:15 – 9:00 (breakfast) Opening Press Breakfast
(Carlos Tavares, Chairman, Nissan Americas)		 Special Events Hall
9:10 – 9:35 Honda Level 3
9:40 – 10:05 Ford Level 3
10:10 – 10:35 Jeep Level 3
10:40 – 11:05 Nissan Level 3
11:10 – 11:30 Hyundai Level 3
11:35 – 12:00 Mercedes-Benz Level 3
12:05 – 12:55 (lunch) Chevrolet North Hall
1:05 – 1:30 Subaru Level 1
1:40 – 2:05 Scion Level 4
2:15 – 2:35 Volkswagen Level 3
2:40 – 3:00 Audi Level 3
3:05 – 3:25 Porsche Level 3
3:30 – 3:50 Jaguar Land Rover Level 3
3:55 – 4:20 Chrysler Level 3
4:25 – 4:45 Rolls-Royce Level 3
4:50 – 5:35 Plastics Make it Possible 1D05
Thurs., April 21
8:15 – 8:45 (breakfast) World Car Awards Breakfast South Concourse
8:45 – 9:30 World Car Awards Press Conference South Concourse
9:35 – 9:55 Tokyo Motor Show Crystal Palace
10:05 – 10:25 BMW Level 3
10:30 – 10:50 Saab Level 3
10:55 – 11:20 Kia Level 3
11:25 – 12:15 (lunch) Mazda Level 3
12:20 – 12:45 Fiat Level 3
12:50 – 1:10 Bentley Level 3
1:15 – 1:35 Lotus Level 3
1:45 – 2:05 Mitsubishi Level 1
2:10 – 2:30 Shelby Level 1
2:35 – 2:55 EV – Pavilion Ride & Drive Level 1
3:05 – 3:25 Disney’s Cars 2 Crystal Palace
3:30 – 3:50 Bark Buckle Up TBD

* Schedule subject to change.

For more information about the Auto Show, go to www.autoshowNY.com.

 

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Posted in Auto manufacturers | 13 Comments »

Cadillac’s “Business Unusual” illustrates the wisdom of separating “Church and State”

March 16th, 2011

http://autoperspectives.com/blog/wp-content/uploads/2011/01/cadillac.gif 200w" sizes="(max-width: 150px) 100vw, 150px" />Cadillac and Time Warner have just started a new program called “Business Unusual. Daring stories from the road to success.” Comedian Chris Hardwick is the host and the basic concept is that he will interview entrepreneurs who have defied the odds by taking a risk and turning it into a successful business.  The outputs are videos featuring Hardwick and the entrepreneur(s) discussing their venture, what worked, what didn’t.  The objective is to draw parallels between what these entrepreneurs have done/do and Cadillac.

Fair enough, but let’s face it, the promise to the consumer is an interesting story about an entrepreneur and secondarily a bit of information about Cadillac.

The two available videos (at cnnmoney.com) illustrate the difficulty of finding the balance between providing the content that the consumer is promised versus the commercial message.

The first video is about a company called Wagic and I think does a pretty good job. The entrepreneurs, their business and products are interesting.  I felt as if I actually learned something about their business idea and how they succeeded.  There is only one moment where I felt the commercial interests intrude.  Toward the end, Hardwick asks shamelessly “how do you go from something like this (pointing to a Kiddalac riding toy) to something like this (pointing to a Cadillac CTS).”  That then leads one of the entrepreneurs to say, “they (Cadillac) started from scratch, that’s what we would do if we were going to make a revolutionary car.” I don’t mind the opening and closing visuals of the car that Hardwick is driving, but forcing the brand strategy into the conversation was a bit over the top and left me a little frustrated.

Unfortunately, the commercial nature is even more overt in the second episode… Read the rest of this entry »

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Posted in advertising, Branding, Communications, Strategy | 16 Comments »

The power of real people helps re-build the Mercedes-Benz brand.

March 4th, 2011

The power of “real” people in marketing is certainly not new. The latest iteration of  the idea is peer-to-peer marketing in social media. The underlying notion is simple, whether it is social media or a traditional “testimonial” commercial, consumers are more likely to trust the opinion or experience of people that they perceive to be like them…real and therefore trustworthy.

Mercedes-Benz has been in the process of re-building their brand’s core values (see earlier post) and recently has been focusing on safety. Mercedes-Benz’ use of real people to make their case for safety results in a very compelling campaign. Here’s a recent television commercial:

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” The accidents changed their lives, the films could change yours.” While the television commercial is nice, the real power comes if you visit the website.  There you can select from a whole range of films and hear each person’s or family’s story. Here are a couple of examples: Read the rest of this entry »

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Posted in advertising, Auto manufacturers, Branding, Uncategorized | 9 Comments »

VW’s Bulli concept, the VW Bus, Jerry Garcia and Yogi; deja vu all over again?

March 1st, 2011

Wow.  VW just introduced a new people mover concept in Geneva that has everyone talking.  Understandably so, it’s called the “Bulli” and it’s great:

http://autoperspectives.com/blog/wp-content/uploads/2011/03/VW-bulli3-150x100.jpg 150w, http://autoperspectives.com/blog/wp-content/uploads/2011/03/VW-bulli3.jpg 717w" sizes="(max-width: 300px) 100vw, 300px" />Obviously this idea shares some genes with the original and iconic VW Bus which many of us associate with the ’60’s, hippies and perhaps a simpler time:

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The VW Bus has such a deep connection with the ’60’s, the counter culture and baby boomers, that a tearful one was used in an ad by VW to commemorate Jerry Garcia’s death in 1995:

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So a reincarnation of the iconic VW Bus is inherently exciting and interesting to many Americans.  The Bulli concept seems to be creating the kind of interest in Geneva that has everyone hoping that VW will decide to put it into production.

Unfortunately, we’ve been here before.   Read the rest of this entry »

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Posted in Auto manufacturers, Branding, Uncategorized | 29 Comments »

Mercedes-Benz scores with (a) safety but not in the Super Bowl.

February 23rd, 2011

Mercedes-Benz participated in the Super Bowl for the first time a couple of weeks ago and they did a commercial that celebrated the company’s rich 125 year history while borrowing a little interest from Puff Daddy:

In USA Today’s Ad Meter, this commercial finished in the top third at 19th.  Of automotive commercials in the Super Bowl it was ranked 4th of 18.  Not a bad showing for the brand but it certainly isn’t getting talked about the way Chrysler’s “Imported from Detroit” spot or VW’s “The Force” commercial is.

I must admit, I felt a little let down.  The Super Bowl is such a huge platform and it demands that you have something important to say and that you do it in a different way. Chrysler understood this and is reaping the benefits.  Mercedes-Benz basically said that they have been building cars for 125 years and the newest ones are now available. Really?  Puff Daddy was enough to get noticed and for the car wonks among us there were lots of wonderful old MBs in the ad but that’s the best they good do with $6MM in airtime on the Super Bowl?

I’m sure the Super Bowl commercial reflects the push and pull of all the various constituents.  The agency folks want the message to be simple and easily understood, the company marketing people want it to be differentiating (125 years) and the dealers want to see product.  Check, check and check.

On balance, the commercial was solid, certainly nothing wrong with it, but it could have been so much more powerful.  Last year I came across some terrific videos from Mercedes-Benz that I think give a glimmer of what could have been: Read the rest of this entry »

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Posted in advertising, Auto manufacturers, Branding | 24 Comments »

The Super Bowl: The big winner was an ad beauty contest also-ran.

February 17th, 2011

This year’s ad beauty contest was fascinating on a number of levels. Like last year, one manufacturer made it into the top ten.  Last year it was Audi, this time it was their corporate brethren at Volkswagen:

VW followed that up with a second commercial that took the 12th spot (#2 for autos). A pretty good showing for the VW guys and their agency, Deutsch LA.

After that things began to slip pretty badly for the auto industry according to USA TODAY.  The chart below details each of the eighteen automotive spots and shows how they ranked in the automotive category and among all the ads in the Super Bowl:

So again, despite having 18 commercials in the big game this year, the auto manufacturers were mostly average at best.  Mini even tried puerile humor, which in the Super Bowl is usually a guarantee of good results, but even “Cram it in the boot” didn’t get it done.

Another year, another set of mostly average commercials, another disappointing showing in USA TODAY.

Except that one auto manufacturer demonstrated that the Super Bowl ad beauty contest truly is just that, a thin veneer that looks great but has little substance.

Read the rest of this entry »

Posted in advertising, Auto manufacturers | 6 Comments »

Super Bowl XLV–Will the auto industry carry the day?

January 26th, 2011

Last year, I asked the same question and I think the answer was “no.”

Audi’s terrific A3 TDI commercial led the automotive pack, ranked 6th of 65 by USAToday but all the others were also-rans. Here’s how the automotive participants ranked in last year’s advertising beauty contest:

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A dismal showing by the auto industry.  Despite being one of the highest interest product categories with some often fantastic products, we seem to be unable to captivate the Super Bowl audience.

To be clear, getting highly ranked in USAToday’s poll has nothing to do with judging a TV commercial’s effectiveness, it simply is a measure of a panel of consumers’ reactions and “how much they liked each ad.”  But it is without question, ‘the game within the game.’  As a Super Bowl advertiser you spend $3MM or so for 30 seconds and the chance to get noticed and liked. It’s an opportunity to get tongues around the world wagging about your ad, your brand and maybe even your products.

But to make that happen, you have to do something amazing. Read the rest of this entry »

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Posted in advertising, Auto manufacturers, The Agency Business | 8 Comments »

Cadillac opens 2011 with a new campaign: “Red blooded luxury.”

January 3rd, 2011

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If you happened to be watching the Rose Bowl on New Year’s Day, you may have seen Cadillac’s new campaign, its first from new agency Fallon.  The new campaign is the first for Cadillac under the aegis of Joel Ewanick who gave the business to Fallon shortly after his arrival last year.  The campaign seeks to clearly position the brand by “taking hold of red blooded luxury” according to Don Butler, VP Marketing, Cadillac.  Mr. Butler went on to define red blooded luxury as “dramatic, passionate, glamorous, daring, a whole new approach to the luxury category.”

Here’s the introductory commercial:

Strategically, I think this work is smart.  I like the idea of setting up the other Tier 1 luxury marques as “blue-blooded” (cold, aloof, distant, rational) and juxtaposing Cadillac’s “red blooded luxury” (passionate, glamorous, dramatic, daring).   Read the rest of this entry »

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Posted in advertising, Auto manufacturers, Branding, Strategy | 12 Comments »

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