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…)
The big news in automotive marketing this week was that Joel Ewanick is leaving Hyundai and going to head up marketing at Nissan. Hyundai won 2009 marketer of the year under Ewanick’s leadership and the company implemented the breakthrough Hyundai Assurance Program.
The Hyundai Assurance Program was a stroke of brilliance at a time when the economy and the auto industry were in a tailspin. It basically gave consumers a no risk way to purchase a vehicle. If you bought a Hyundai and subsequently lost your job, you could return the car, no questions asked. Truly brilliant and it propelled Hyundai through the recession and out the other end. Hyundai’s 2009 sales grew 8% and its share of market was up 1.1 points. This performance earned it elite status as one of only three automobile brands (Kia & Subaru were the others) to increase volume in 2009, while the industry overall declined 21%*.
The Hyundai Assurance Program was an unqualified success in a tough marketing climate. But now what? (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.”
It has a feeling of inevitability attached to it, but still, I can’t help but feel let down. For years many of us have held up BMW as the example of a car company that understands its brand and sticks to it. That all just changed. BMW is no longer the manufacturer of The Ultimate Driving Machine, according to this commercial “at BMW, we don’t just make cars, we make joy.”:
The longest running and probably best known automotive industry positioning line has been thrown in the bin in favor of “Joy.” I’m conflicted. On one hand, I’m shocked and I really believe that BMW has made a horrific mistake, but on the other hand, there are aspects of this new campaign that I like.
“The new “Joy” campaign ‘is a big departure for us,’ said Jack Pitney, vice president of marketing for BMW North America. ‘We hope to really add some humanity to our brand’ and show the diversity of its buyers,” — Wall Street Journal 2/15/10
In fact, what I like about the commercial is the humanity. It’s fun to watch people enjoying life in and around their BMWs. To see enthusiast communities enjoying their passions together. To see all kinds of people, some even like me, joined together by a common bond created by a car. It is truly what makes great automotive brands great, that sense of being part of something bigger than you are.
Toyota has been very successful in the US and has undeniably eaten Detroit’s lunch. Now Toyota has stumbled and you can hardly blame its competitors for attempting to take advantage of the situation.
That said, it’s a good time to pause and take a deep breath, because as so often is true, it’s not what you do but how you do it that matters.
Today’s New York Times has an article headlined: “With Toyota in trouble, rivals gain.” Manufacturers are offering incentives to encourage Toyota owners to come in their stores, trade-in their Toyota for a new whatever. Supposedly these incentives are not being widely advertised and dealers are being encouraged not to “try to take a predatory stance in this type of environment.” According to GM and others, their dealers have requested incentive support. Of course they wanted incentive support, there’s blood in the water.
There are a couple of good reasons to push back against this knee jerk reaction to offer incentives. (more…)
Toyota is in deep stuff given the allegations of unintended acceleration, several huge recalls that will cost BILLIONs of dollars, continuing investigation by NHTSA, civil penalties, reduced sales, weakening brand image scores and deflated residual values.
There has already been plenty written about the impact of this on Toyota’s brand reputation. It certainly is going to set them back, some pundits say it’s a “speed bump” for Toyota, others say the situation will effectively “kill” the Toyota brand. I suspect that the “truth” will be somewhere in the middle, the Toyota brand has been damaged, it will take a good deal of time and effort to recover, but it will recover.
Rather than debating the current health of the Toyota brand, I’ve been thinking about the discipline of branding in the automotive category and what its practitioners can learn from Toyota’s experience. Certainly the need to manage the media and to do so in a transparent way is critical. Time is of the essence, the internet can take your reputation and spin it out of control in a heartbeat. Beyond the crisis management learnings, I think that we are seeing the danger of having a brand that is based solely on rational underpinnings. (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.
Last year when I was considering what new luxury segment vehicle to purchase I had an experience that I think bodes well for Cadillac.
Keep in mind that my family has a long history with European imports. In fact the last domestic product we bought was a 1986 Jeep Cherokee, just before the SUV craze really took hold.
Since that time we have had Volvos, a SAAB, a Mercedes Benz, half a dozen Audis and a couple of VWs. For the last fifteen years my family has been happily ensconced in a series of Audis. As great as our experience has been with our Audis (we still have 2 in our household fleet) I thought it might be time for something new.
Growing up in my household, my sons could not help but pay attention to the automotive industry and both of them love cars. So as I went through my deliberations concerning a new car, two conversations with my sons illustrated the change that is about to take place in the luxury segment. The first with my then 22 year old, who when told I was thinking about a Mercedes-Benz, dismissively said “don’t buy a Mercedes-Benz, that’s an old man’s car.”
The second conversation, this one with my 25 year old, didn’t demean the possibility of a Mercedes-Benz, but concluded with “Dad, you should take a look at the Cadillac CTS, I think they’re cool.”
Now it was my turn to be surprised. I admit that I have impressed by the design direction of Cadillac and I certainly recognize that the product is greatly improved but “cool” from a twenty five year old’s point of view?
For 30+ years we have watched the Europeans and Japanese recreate the luxury segment as the domestics lost favor. Very few baby boomers thought of Cadillac or Lincoln as marques they wanted in their garage. Mercedes-Benz, BMW and Lexus have been their first tier luxury brands of choice. However, the preeminence of these brands is being challenged.
There are three reasons why the “Tier 1” luxury brands are under fire:
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