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:
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. (more…)
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:
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. (more…)
In recent years, Audi has done a terrific job marketing its brand. Sales are up globally and will probably exceed 1.0MM units this year (WSJ 8/2/10). In the US, Audi came through the recession on a tear and has never looked back. Great products, great design, with quality that has improved and is now comparable to the best in the business. The Audi brand is aspirational and prestigious in most global markets. While it has lagged its competitors in the US, it has gained in prestige in recent years and many would say it has achieved the vaunted Tier-1 status in this country.
So why would one of the most well-regarded progressive luxury automotive brands in the world make the silly mistake of blatantly copying their nearest competitor?
A few weeks ago I was in the UK and I happened to walk by Leicester Square in London and was excited to see an Audi display in the park. I went over to have a look and discovered that the display was part of the UK’s introduction of the A1.
The display was called “AreaA1″ and it was getting a lot of attention from Londoners. It was the first time I had the opportunity to see the A1 in person. It’s a wonderful car and I hope the folks at Audi of America make the decision to bring it to the US. It was so crowded, that it was hard to get a picture….at least a good picture: (more…)
The D-segment of the luxury market is tough. The best luxury manufacturers in the world bring their best technology, design and engineering to the table and the result is the world’s best 4-door sedans: BMW 7-Series, Mercedes-Benz S-Class, Lexus LS, are perennial best sellers. It’s tough to break-in, Audi has struggled for years to build volume in the segment with its A8 despite having what many would say is the best product.
So what makes Hyundai think they can introduce the Equus into this rarefied air and succeed?
Let’s get one thing out of the way. From a product perspective, the Hyundai Equus will be a very able competitor to the best luxury sedans in the business. Hyundai has demonstrated that they build exceptional quality cars at multiple price points, the most recent being the Genesis, a near to mid luxury entry. The Equus is already getting good reviews and at $55,000 will offer D-class luxury at a very reasonable price.
The issue for Hyundai is not the product or the price. (more…)
The last twenty-four hours has been full of articles, blogs, tweets, surveys, all questioning the wisdom of the folks at Chevrolet who were apparently seeking to remove “Chevy” from the brand’s lexicon (NYTs 6/10/10). Predictably, people were shocked and the Chevrolet folks accused of varying levels of insanity, some even questioning their patriotism.
Thankfully, as the day wore on, Chevrolet made an effort to explain that it had been mis-understood (see the press release) and that the memo leaked to the New York Times had been “poorly worded.” Unfortunately for the folks at GM, this whole incident has just added fuel to the fire for those folks who want to find fault with every thing the company tries to do. If you take the GM folks at their word, what they were trying to do really isn’t crazy.
At the heart of this dust-up is a real issue. How to most effectively manage a global automotive brand.
Here’s a video of Alan Batey explaining that indeed “Chevy” is just fine but that “Chevrolet” is the global brand:
Put aside Mr. Batey’s understandable defensiveness and his desire to assure us that “Chevy” is OK. (more…)
Yesterday’s Automotive News had a brief piece about Infiniti marketing that struck me as interesting. In it, they reported that “Infiniti has told its dealer advisory group that it is committing to a five-year run for the new ‘Way of Infiniti’ campaign–a long-term pledge intended to reassure retailers that the brand will have a consistent message.”
I immediately thought to myself “Good for them.”
Infiniti from the very beginning has had a difficult time establishing a brand identity and finding a way to execute it in communications. Introduced in 1989, Infiniti was Nissan’s response to the introductions of the other Japanese luxury marques, Acura and Lexus. The original Q45 was a sporty performance alternative to the Lexus. Unfortunately, Infiniti got off to a rough start when it introduced the car and brand with the infamous “rocks and trees” campaign created by its agency Hill, Holliday, Connors, Cosmopulos.
The “rocks and trees” campaign sought to present Infiniti as the result of the unique Japanese culture and sensibility. The campaign attempted to make its Japanese origin an asset, similar to the way that the German brands have used their ‘German-ness.’ The Infiniti ads were very different than any automotive company had ever done (they didn’t even show the car initially). (more…)
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?
Curvin O’Rielly has been kind enough to allow us to publish this article on McNaughton Automotive Perspectives. For those of you who don’t know Curvin, he is one of the most respected copywriters in the advertising business. Among his automotive accomplishments was the creation of the Saturn brand with his colleagues at Hal Riney and Partners. As you will see, Curvin’s perspective on automobile advertising is both timely and timeless.
Everything “Old” Is “New” Again
By Curvin O’Rielly
In 1982, when I was a young creative director at BBDO in New York, I was asked to write an article about the automobile business for Magazine Age.
The article was well received. I even won an American Business Press award for it. The question is, has it stood the test of time?
Well, some of the details I included in the article are as dated as the wide ties we used to wear (the ones you’re saving, hoping they come back into style again), or the disco music we used to listen to (admit it; you boogeyed to disco), or the haul-ass iron we used to drive, the cars with more horsepower than their suspension systems and brakes could reasonably handle (unless they were well-engineered vehicles from Europe).
What’s still true about my article, unfortunately, is that the automobile industry is once again in deep trouble. This time, it’s poised at the abyss, owing in part to the economic tremors that came close to causing a complete meltdown. At the abyss, too, because it was smart (or so it prided itself) but then not smart enough. I mean, surely those at the wheel had to have seen all the danger signs on the road they were heading down, just as they had to have known they were racing toward a disaster of epic proportions.
That said, here are the observations I made 28 years ago, with some minor rewrites here and there.
An article in the April 2nd edition of the New York Times was headlined: “Despite Expansion, Mini Says It’s Still a Niche” and confirmed something that had occurred to me at the New York Auto Show.
In New York last week I saw the new Mini crossover, the Countryman, for the first time in person. All the Mini design cues are present in the Countryman and I think you’d be hard pressed to say that it wasn’t part of the Mini family. But I was struck by how “big” it seemed, it didn’t seem small and taut the way all the other models do. Part of the difference was that the Countryman’s ground clearance is higher, so its stance is really quite different than the other Minis.
This got me thinking, at what point does a marque go too far and begin to lose its essential character? Has Mini gone too far with the Countryman?
I suspect this is a little like losing your hair. Little by little your hair recedes, almost imperceptibly, you make little adjustments as you go, thinking no one will notice, until one day you end up with comb-over and people are snickering behind your back. Little by little automotive brands seem to lose their way. (more…)
Amid all the drama surrounding GM, every so often I see something that strikes me a smart. In Geneva, Cadillac announced it’s aspirations for Europe (WSJ 3/8/10 Sub required, NYT 3/2/10).
After a number of high profile failures to enter the European market in a big way, the folks at Cadillac want to be a niche player and are willing to accept the lower volumes that go along with such a strategy. By keeping volumes low, and presumably margins high, they expect that they can be profitable from year 1.
I think this strategy is sound and will succeed. Cadillac’s current design language is unique and appealing. There has always been a segment of the automotive market that is interested in something different and Europe is no different than the United States in this regard. In Europe where Mercedes-Benzes, Audis and BMWs are common and cover a multitude of uses including taxis, rental cars, executive cars and the vehicles of choice for captains of industry, there is an opportunity for something “different.”
