Filed under: Marketing/Advertising, Hyundai, Lexus
Automakers to depend on marketing more to compete
This story over at BrandWeek basically says that while quality among all makes is closer to equal now more than ever, some companies' sales have not improved to reflect that. Several (Hyundai was one named) blame marketing approaches for disappointing sales and hope to use new approaches to attract more buyers. Hyundai COO Steve Wilhite came down pretty hard on his own company:"We haven't done well at all in creating any kind of perception around this brand," he said. "We have the most advanced manufacturing facilities in the world and we aren't telling the story. It's not [primary agency] Richards Group's fault; it's our fault. They need a client that provides good guidance."
GM hopes to get a marketing advantage with new online campaigns, while Audi looks to revamp its dealerships. And though Lexus sales were up last year, it sees the growing Hispanic community as a good place to find even better year-end numbers.
It's an interesting look at how the world's automakers plan to use their marketing departments to distinguish themselves in a world where most cars are at the basic level, not all that different.
[Source: BrandWeek]
Reader Comments (Page 1 of 1)
Michael Karesh 3:42PM (1/17/2007)
I tend to take a marketing perspective, but I've got to call BS on this piece. So a major marketing journal says that automakers are going to have to rely more on marketing? And dentists says it's important to brush.
I wrote a paper years ago for which I dug up comments in the press that cars were no longer distinguishable and thus other means like marketing would have to differentiate them. Guess what? I found stories about this problem as far back as 1938. And over and over in the years since then.
Fact is, after a period of bland boxiness back in the 1980s, we're seeing stronger design differentiation today than ever before. Will anyone confuse a Cadillac for a BMW? Or a BMW for a Mercedes? Or a Mercedes for a Volvo? I don't think so.
This isn't to say that marketing isn't important. It is. But it's best applied together with a well-diffentiated product, not as a substitute for one.
On the reliability parity issue, the differences are still there, though in absolute terms they're much smaller than they used to be.
Initial results of my site's reliability research:
http://www.truedelta.com/results0906.php
Next quarterly update will be posted by late February. No big changes from the first set based on responses to date, just larger sample sizes and more models.
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Chris 4:20PM (1/17/2007)
The quality gap is still there.
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Atul 4:47PM (1/17/2007)
I concur with Michael. Now that efficiency is more important, differentiation is subtle because vehicles have to be lighter and more aerodynamic, closer to optimal. Since cars are such emotional purchases, marketing does have an impact. But with new infotainment type technology, vehicles can be differentiated with features, fuel economy, performance, and just general design character.
As for reliability, based on what TrueDelta shows, the differences are minor and more in the consumer's minds. This is where marketing may have a bigger impact, but nothing can replace positive product experiences. These experiences lead to word-of-mouth reputations which last longer than the product differences do. Then the press seems to jump on the bandwagon that Japanese vehicle quality is far superior to American car quality. Remember that a difference of 50 problems per hundred is an extra half problem per vehicle.
Atul
www.realitydriven.com
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Gardiner Westbound 4:58PM (1/17/2007)
This implies there is somebody out there who still believes advertising bumpf. Ford pounded consumers with its "Quality is Job 1" mantra for a decade while turning out some of the least reliable cars in history.
TTAC’s Robert Farago recently wrote, “Even without considering the vagaries of image and style, GM customers have been stranded by the road, bilked at the service department and empty-pocketed at trade-in time. In fact, GM horror stories stretch all the way back to 1967, the year The General substituted plastic for chrome and generally lost the plot. Even more alarming … some of these tragic tales are as recent as last week. In any case, whenever someone buys a GM product and discovers that it's worse than their previous car, they've lost pleasure (a.k.a. experienced pain). The association is burned deep into their psyche. They will not risk losing again. To get disaffected customers back into the GM fold, one of two things has to occur. Either the potential customer's current, non-GM car (or service department) has to traumatize them or someone has to eliminate the risk of GM ownership. Obviously, there's not a lot of chance that non-GM brands are going to inflict duff vehicles or bad service on their customers. Which leaves GM one option: to create a risk-free ownership experience. Audi did it when unintended acceleration puts the brakes on their entire operation. Mitsubishi did it when no one knew their name. So did Hyundai. Hello? GM? Where's your guaranteed buy-back deal, 10-year 100,000 mile warranty or risk-free trial period?"
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The other Bob 5:20PM (1/17/2007)
"In fact, GM horror stories stretch all the way back to 1967, the year The General substituted plastic for chrome and generally lost the plot."
I love it when people talk about their poor car experiences that happened decades ago.
Who made a more reliable car than GM in 1967? No one. The Japanese were just starting to come to the U.S. and these weren't better made, they were just cheap. Back then Japanese cars came "pre-rusted" from the factory. German cars were not better. To own a Mercedes you had to carry a tool kit in the trunk.
I have owned and enjoyed many cars made in the late 1960's and 1970's, many of which are still on the road. If that was the time of poorest quality, nobody has reason to complain.
I think reliability became a problem in the early 1980's when environmental regulations required a lot of complicated emissions control equipment that more modern cars no longer need. This equipment presented a huge amount of complication and reliability problems for car-makers.
The problem I see for any car maker is that if a customer has a model that's a lemon - say it's a 1995 model – and they replace it with a 200o model, it is guaranteed to be better because of the strides in quality. In that time frame the worst 2000 models were better than the best 1995 models. Therefore, no matter what brand the 2000 replacement was, it was definitely more reliable. The owner probably said that it was due to the brand, assuming they switched brands, but in reality all cars had gotten better in that 5 year timeframe. That customer will not return to the first brand because they had better luck with their second brand.
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bernie 6:54PM (1/17/2007)
GM, Ford and Chrysler have done their best to make automobiles a commodity. Not selling? let's cut the price to below cost, just so we don't have to show any gumption to the UAW. They don't care about resale value. They don't care about great cars. Why would "car gut" Bob Lutz let half the bland blobs roll off GM assembly lines year after year?
So it's all about two things: Quality and price. Toyota appeals to immigrants and seniors who see the car as an appliance. GM and Ford appeal to people who see a $40,000 overprices POS Expedition marked down to $26,000 at 0% financing and drool at the deal.
Wilhite left a fairly strong brand at Nissan to go to a nonexistant brand in Hyundai just so he could stay in California. Nissan is doing better since he left and Hyundai is doing worse. Koreans can't get over the crap they produced in 90s and their reputation for being ruthless managers and authoritarian dictators.
If the automotive business wants to return to profitable times they need to convince the Detroit 1 3/4 to wise up and sell cars based on personality and pizzaz as well as quality. The UAW has to be jettisoned as a realization that the US is uncompetitive on a cost basis vs. every other country. And finally the industry has to find some way to get healthcare costs under control or everything will move elsewhere within a decade. Mark it down.
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Gerry 11:32PM (1/17/2007)
"So a major marketing journal says that automakers are going to have to rely more on marketing? And dentists says it's important to brush."
My thoughts exactly.
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Steve Parker 2:14AM (1/18/2007)
As someone who spent years literally "learning at the knee" of one of the greatest automotive marketers of all time, and ghost-wrote his successful book a few years back ("Glory Days" by Jim Wangers), I can tell you that there's a small problem in automotive marketing these days ... That is, a huge percentage of the people in the industry do not know the DIFFERENCE between "advertising", "promotions" and "marketing". Even with great product, and we all know Product is King, poor or misdirected marketing or a lack of understanding of what marketing really IS will doom any product ... Diamond ring, perfume, SUV ... You name it.
Yes, brush more often.
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Richard Warren 10:20AM (1/18/2007)
Michael,
Agreed
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