The SAAB brand is fighting for its life. After being pronounced dead last week, there is a glimmer of hope this morning. I think it’s important that SAAB survive. Not just because thousands of jobs depend on it but because we need brands like SAAB to push back against the commoditization of the automobile industry.
There are lots of reasons to let SAAB go. It hasn’t made money in years. It doesn’t sell enough cars to compete in the global auto industry. GM has starved it for product. It lost its uniqueness years ago. It was really never “iconic,” just “quirky.” The list goes on and on, and many of the reasons are very sound.
I hope that GM will allow Spyker to buy SAAB. An independent company like Spyker could enable SAAB to reclaim its position as a niche brand with a unique product and a loyal enthusiast base. We need a brand like SAAB to prove that interesting, well engineered products still have a place in the industry and can be successful.
In its effort to make SAAB appeal more broadly and therefore justify volume levels that would make it “viable,” GM turned it into just another undifferentiated near-luxury entrant. The world does not need another undifferentiated automotive brand and from that perspective I understand why people think SAAB should go away. SAAB would be yet another automotive brand that was once distinctive, chased volume using the MDIBTYD volume forecasting methodology and ultimately failed because it lost sight of the core values that actually made the brand “viable” in the first place.
The automobile industry is entering new territory as the recession wanes and consumers, who have been emotionally scarred by the last 18 months, remain cautious. Many believe that consumers have been forever changed by this recession and that they will be more conservative with their money for years to come.
No one expects that the automotive industry will achieve the heady sales levels of the early part of this decade.
“By 2013, car and truck sales in North America will rebound to the new normal rate of 15 million to 16 million units” Automotive News 8/5/09
At best, we will attain a “new normal” of 15-16MM units in 2013.
That means that competition for customers is going to be tougher than ever and no one’s business is going to grow just hanging on to the industry coattails. Historically the manufacturers have reacted to these types of circumstances by using incentives. These tactics artificially inflated sales earlier in the decade, pulling sales forward and contributed to the most recent “correction” that has pummeled the industry. Using short-term incentives to steal share is not the answer to long-term prosperity, it’s merely a tactic that gives a franchise a quick shot in the arm. Establishing a brand’s immutable points of difference and creating consumer affinity for it, is what creates value over the long term.
Last week, BusinessWeek published a piece by Ed Wallace about GM making the same mistakes; in it he made the case for branding:
“True, people want a “deal” when they buy a new car. But more important, they want to buy something exceptional….The automotive selling process, done right, has little to do with negotiation: It has everything to do with building value in the vehicle.”
It’s about time the industry took “branding” seriously.
Last weekend, I did something I haven’t done in recent memory…I went to my local Buick dealership. I’ve read good things about the new Lacrosse and I wanted to see it for myself.
The dealership had one car. It looked terrific. The salesman said that it was “more European in its styling” and I agree with him. No land yacht here. My one gripe was the “portholes” on the hood, if that is a Buick styling cue, it’s one they should let go (one man’s opinion).
Regardless of the “portholes,” it was hard not to be impressed by the car. If the 2010 Lacrosse is indicative of where they are taking the Buick product line then I’m already thinking about the brand a little differently.
As impressive as the product was, that was not the most interesting part of the dealer visit. I asked if I could drive the car and was politely told, I’d have to “wait my turn.” People were lined up to drive the new Lacrosse! The best news…they weren’t all 65 and older, quite a few were 10-15 years younger.
Based on one dealer visit and the crowd around the 2010 Lacrosse, perhaps the Buick brand is going to surprise us.
A number of years ago VW introduced the Phaeton to the United States…a $65,000 tour de force meant to take the brand up against the likes of Mercedes-Benz. A true D-class car with all the luxury and performance the segment demands. It was truly an excellent automobile and from a product point of view pretty darn competitive. It was also a heck of a lot of car for the money.
The Phaeton failed miserably, with only a few thousand sold.
Many of us thought that VW had simply overstepped, and that the VW brand could not stretch that far up market. Not unreasonable considering that many of the baby boomers still remember the original beetle and VW’s positioning as an inexpensive, small alternative to the behemoths Detroit was producing in the 50′s and 60′s. In fact the “inexpensive” portion of the brand’s original positioning haunted VW for years as the cars became more expensive than consumers expected Volkswagens to be. The Phaeton stretched everyones’ perception of what a Volkswagen could or should be. Most importantly the brand lacked the cachet, the prestige necessary to compete successfully in the Import High Group. Luxury segment consumers were not interested in sporting the VW badge.
Within the last few months the trades have been reporting that Volkswagen AG and Volkswagen of America are more than likely going to bring the Phaeton back to the US market in MY2010. Already industry pundits are incredulous that VW would try the Phaeton again.
I think the pundits are wrong. I think the return of Phaeton will be a success. (more…)
News that Penske has backed out of the deal to purchase Saturn will ripple through the industry in a myriad of ways. Detroit’s economy will be effected, thousands will lose their jobs, dealers and their employees are left scrambling. These are the serious consequences of the deal blowing up.
Less serious, but no less real, is the fact that another automotive brand will disappear. There was time when Saturn stood for something: “A different kind of car company.” The promise of no haggle pricing and a dealer experience that was customer focussed and positive. These attributes were foundation stones of a remarkable branding campaign:
These ideas and brilliant marketing created the essential ingredient of an automotive brand…brand advocates…..lots of them:
The following article first appeared in BusinessWeek’s “Brand New Day” blog on September 7, 2009
Volkswagen has announced that it is looking for a new advertising/communications partner. Chrysler has just announced that they are considering non-roster agencies for projects. Bob Lutz at GM has said that the agencies for the remaining GM brands have six months to demonstrate that they have the chops to remain part of GM’s stable of agencies. A rash of car companies re-evaluating their agency partners.
So what should these companies, or for that matter any automotive manufacturer, look for in an agency?
The next five years are going to be the most competitive in a generation. The “new normal” annual sales volume for the US will be 14-16MM units, nowhere near the 18MM the market achieved a few years ago, let alone the 20MM+ some forecasters anticipated. The “new normal” is a mature market where the fight for share will be intense, the risk of commoditization ever present and the winners will be those companies who recognize that the only thing standing between them and commodity status is terrific product and a carefully crafted brand reputation.
The “winners” will be those companies with clearly differentiated brands. Those companies that make establishing and/or nurturing their brands a priority will see their share of market grow, those who focus only on retail will be treated like commodities. Automobile manufacturers do need agencies that can manage the retail side of the business but more than ever they need to take brand building seriously.
So here are some suggestions on what to look for in an agency:
1.An agency must demonstrate the ability to build a brand over the long term. Look for relationships and case histories that span years not months. Look for strategic consistency that is grounded in a deep understanding of the client and its customers. Make sure that knowledge turns into core values that form the bedrock of the brand’s communications. Look for the “red thread” that holds all the work together. Ask 2nd and 3rd level questions about the company and its brand.
VW of America just announced that it is reviewing its advertising business currently with Crispin.
VW is truly one of the world’s most loved automotive brands. While there have been a number of clever and in some cases intrusive commercials from Crispin there has been little that has built or even sustained the VW brand.
Crispin is without question one of the most talented creative agencies in the country but while they did a wonderful job helping to create the Mini brand, they never succeeded in bringing that power to Volkswagen.
At times the work was startling, stopping you in your tracks:
It seems the automotive industry does a better job of “talking the talk” of branding than it does of “walking the walk.” Of course there are exceptions, and Mini is a great example. When introduced a few years ago the creative work for Mini was widely lauded (see link below) and it set the marque on a path that led to the events of last couple of weeks.
This week it was announced that Roger Penske had cut a deal to buy the Saturn brand from General Motors. What a terrific development for Saturn and the Saturn brand.
A few weeks ago I was with a GM marketing guy and he made the observation that “you can tell that finance guys made all the decisions about the future of GM, because marketing folks would have kept Saturn and Hummer.”
The point he was making is that a marketing person would have recognized the inherent value in the Saturn and Hummer brands. It looks like Hummer is going to get a second chance with a new Chinese owner and it remains to be seen if Hummer can successfully navigate changing consumer sensibilities to build a solid and profitable business in the US.
Let me start by pointing out that I am not a GM basher. I think the government was right to help and I want the company to succeed.
Having said that, the new GM advertising and website (http://www.gmreinvention.com/) which seeks to convince us that there is a new company called GM and that it is re-inventing itself is lame at best and insulting to our intelligence at worst. Here’s the new commercial/video:
If you go to the website, there are quite a number of interesting videos and lots of information designed to make the reader feel confident that this is a company that is changing and that it has a bright future.
Here’s what bothers me, the same GM team using the same agencies have cranked out another big production anthemic commercial and a bunch of videos…where’s the “re-invention” in that?
de force meant to take the brand up against the likes of Mercedes-Benz. A true D-class car with all the luxury and performance the segment demands. It was truly an excellent automobile and from a product point of view pretty darn competitive. It was also a heck of a lot of car for the money.
