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?
When I first saw this Acura commercial it got me thinking about what constitutes “old news” versus something relevant and important:
This Acura commercial is about crumple zones and their ability to absorb energy in a crash while directing it around the passengers ensconced in a safety cage. It’s a nicely executed commercial that provides people with information that gives them confidence that Acuras are safe.
But it isn’t new and it certainly isn’t exclusive to Acura. Many of us would say that crumple zones are “old news.”
In 1952, Mercedes-Benz received a patent for a crumple zone in an automobile. Up until that point rigidity was regarded as the key to protecting passengers in an automobile accident. The 1959 Mercedes-Benz W111 series included crumple zones and was actively crash tested by the company.
I can still vividly remember the first time I actually saw a crash test. It was at the Mercedes Benz Safety Center in the Sindelfingen plant outside Stuttgart. I was amazed at the devastation created by a thirty mile an hour off-set crash. Right then and there I learned the value of a crumple zone.
Today, every automobile manufacturer uses crumple zones to make their cars safer.
Yet here is Acura, using their version of a crumple zone to differentiate themselves from their competitors.
If every car has crumple zones, then what’s differentiating about Acura’s? (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.”
The sentimental favorites won the Super Bowl…at least the football game part.
Generally speaking I thought the advertising game within the game was just OK, not great. Within the automotive segment, six manufacturers stepped up for the Super Bowl:
As I said in an earlier post, the tough part about advertising in the Super Bowl is that while the football game is the primary draw, the advertising contest comes in a close second. As an advertiser you have to be willing to do work that will stand out and entertain because the very next day the “results” of the ad contest will be published in USAToday.
I always watch the Super Bowl hoping that one or more of the automobile manufacturers will break out of the category mold and amaze us. Here’s my take on the automotive commercials, from best to worst: (more…)
There’s an interesting piece in this week’s Adweek by Dean Crutchfield, Chief Engagement Officer at Method: “A Brand by Any Other Name…”
He posits that one of the issues with “branding” as a marketing discipline is that we lack an agreed-to definition, which subjects it to interpretation based on circumstances or agendas. He closes by saying that agencies and marketing services firms need to more tightly define branding:
“If we don’t address this, we could be perceived as an industry made up of people who don’t know how to define what it is they’re not supposed to do. As Grouch Marx would have told us, ‘These are my principles; if you don’t like them, I have others.”
Leaving aside the issue of agency credibility, the automotive industry needs to dedicate itself to building or re-building its brands. Manufacturers who do will succeed in the hyper-competitive “new normal” automotive marketplace, while those who don’t will languish.
The automobile business has traditionally had a shaky relationship with the idea of “branding.” Programs designed to define or position the “brand” are often perceived as the “soft” part of automotive marketing. This perception is in contrast to the marketing specifically designed to drive traffic to the stores or in industry parlance “make the doors swing.” Often manufacturers feel that they have to choose between “branding” and “retail” and more than often than not they choose retail.
I think that part of the problem with the discussion of “branding” in the automobile business is that it most often devolves into a discussion of advertising, as in “this is a brand ad, that is a retail ad.” Brand ads are the ones that attempt to speak to a company’s “values” whereas retail ads feature “product, place and price.” This either/or conversation is specious and has led the industry to it’s current situation, products that are perceived more like commodities and customers who focus on pricing.
Let’s be clear, in the “new normal” automotive market the traditional brand vs. retail discussion is a path to commodity status, decreased sales, decreased profitability and the loss of already weak brand equities. The truth is, every successful automotive competitor will do both jobs, build brand leverage and make the doors swing.
The marketing conversation needs to start in a different place and I agree that it needs to start with a definition of what we mean by “brand.” (more…)
Here it comes again, another automotive luxury brand seeking to have “wider appeal without tarnishing the image” (Automotive News 1/11/10).
Lexus is concerned that their customers are too old and they are not appealing to the next generation of luxury car buyers. A reasonable concern.
Lexus appears to be addressing this concern in the usual way that automobile manufacturers do.
First, you add product to your line-up that is designed to meet the requirements or interests of the new target group (after all, they’re very different from the current customers), then you lower the cost of entry into your franchise (they don’t have as much money as the current customers) and finally use marketing to convince the younger target that your brand is cool (at least cooler than they think it is).
Unfortunately, this approach always has the same result, you may succeed in selling a few more cars to the new target group but you leave your current customers confused and your brand weakened.
The Automotive News article even quotes Jessica Caldwell from Edmunds.com who says: “Lexus was really strong, but they have lost their footing….BMW is the ‘Ultimate Driving Machine.’ We’re not really sure what Lexus is.” I agree with her. The overheated luxury segment experienced so much growth in the ’90s and early ’00s, that many of the luxury marques that were fortunate enough to have clear positionings in the beginning were weaker and less distinct at the end of the run-up.
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.
As an industry we’ve lost sight of our great brands. In some cases companies have gone bankrupt or been acquired and a brand disappeared, in others a world war got in the way. Studebaker, Cord, Horch, MG, Triumph and countless others have evaporated for a variety of reasons.
Today, as Detroit goes through an unprecedented upheaval, there will be more brands lost. Saturn, a once very special brand, will go away. So will Pontiac and Hummer. We can only wonder what will happen to brands like Jeep. Brands that stood for something, had a point of view, and marketed products that reflected a certain perspective. Brands that developed a loyal following because they stood for something! They weren’t for everybody, and that was OK.
As discouraging as it is to see a great brand go away because of a structural change in a company, it’s worse to see brands die of neglect by the very people charged with protecting and building them. Over the last 20 years we have watched a number of great automotive brands that automotive marketers worked very hard to create, begin to whither away. The aforementioned Jeep is one, Volvo another. Mercedes Benz, Jaguar, Land Rover, SAAB, Lexus and even mighty BMW feel somehow “less” than they did even ten years ago.
What’s happened? Expansion happened. Chasing volume happened. Brands that meant something specific and clear found themselves needing to be “more.”
