The Heineken Factor

This Bud's for you ... and you and you and you. On Wednesday, September 29, Budweiser hosted a "National Happy Hour," in a quest to gain market share that import brands like Heineken have been steadily stealing over the past few years. The slightly more refined, upscale imports and craft beers remind me of what has happened to the U.S. auto luxury market.

I think there is a stigma related to a Detroit automaker building a "luxury" car, one that's been around for a while, but it seems to be getting worse. Just 12 years ago, according to Crain's, Lincoln was the top selling luxury brand in the U.S. with sales of 187,121. Last year, it sold just 82,847 cars, putting it in seventh place, way behind the luxury leader, Lexus, who sold 215, 975.

To add insult to injury, consumer awareness of the domestic auto industry is at an all-time high thanks to the bankruptcies at Chrysler and GM and the bailout program. Prior to 2007, I would contend that perhaps half of U.S. consumers did not know that Cadillac and Saab were owned by GM or that Ford owned Lincoln, much less Jaguar, Land Rover and Aston Martin. But today, those numbers have to be much higher, which isn't likely to help the domestic carmakers, as even more consumers associate Cadillacs with Chevys and Lincolns with Fords.

Having once worked in Ford's Lincoln-Mercury organization, I can attest to the fact that the Lincolns we built and sold were just as good as many of the import luxury vehicles, sometimes even better. But that didn't make a difference when I pulled into my driveway in my Lincoln Mark VIII. (Remember that one?) My neighbors still cast scornful glances from their Mercedes and BMW sedans. I was somehow a poser for driving a "near-luxury" car and not the real deal.

From a marketing perspective, we used to go the extra mile to test our Lincolns against the best of the best: Audi, BMW, Mercedes, Lexus, Infiniti, you name it. We had to make these competitive claims to prove Lincoln's prowess and strength against the luxury snobs. But regardless of the results, stealing sales from the import kings is very hard to do.

Even today, the comparison ad is still a staple of the luxury industry. This ad pits Audi against all of the big dogs... except Lincoln and Cadillac of course. When doing a comparison ad, you always compare "up" and unfortunately for Cadillac and Lincoln, they aren't considered "up" by Audi.

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On the other hand, when you are the leader, self-proclaimed or otherwise, you simply talk about yourself ... something Mercedes is really good at.

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But when you are Budweiser trying to deflate the image of Heineken, what do you do? Well, in this ad Cadillac makes a "best" claim and compares itself to Mercedes and BMW ... certainly not Lincoln. So, by associating itself with the group it wants to be in, it thinks that it can disassociate itself from the group that it is stuck in.

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That group is still stuck in the middle, which is a tough place to be for a brand. Advertising can help, but it won't fix the problem. Investment in the vehicles, upgrading of the dealer, service and ownership experience are what will count most.

While Both Cadillac and Lincoln have some convincing to do, Cadillac seems to be on the right track. However, the bankruptcy issues have hampered its momentum, like the rest of GM. Still, the brand is putting a solid effort into the cars and the marketing too.

Lincoln has a way to go. With the Lincoln-Mercury marriage now ended, it is still left with dealerships that were built to house both brands, one of which was decidedly not luxurious. Being a luxury brand means that everything has to live up to the test of luxury, from the car to the dealership to the service and the ownership experience. So Ford is closing dealerships and putting its Mercury money "all-in" to Lincoln.

It should help some but will it be enough?