Wednesday, August 20, 2008

Incentive Driven Pre-Order Effectiveness

Unfortunately for Volkswagen the minivan isn’t growing. In fact, minivan sales have dropped for years and this year along they have fallen 20% (overall auto sales are down 8%.) So after years of co-development with Chrysler/Dodge, the VW Routan is making its debut this fall.

Let’s first understand the cutesy name of this family hauler. Routan is an invented word indicating the bond between VW and America. It is a combination of the words ‘route’ and the ‘-an’ suffix VW uses for other European vans.

The Routan’s initial marketing push is to drive pre-orders by giving a free gift. The enticement is an U-Promise $1,500 college tuition contribution. There is of course a nice fit between a family focused minivan owner and doing something for the kids. Pre-orders are not an easy thing to obtain unless the car is in high demand with limited supply availability, think a desirable sports car like the Nissan GT-R. But do pre-orders with a gift actually drive more sales?

I’m going to break up Routan buyers into two groups: people who are going to buy a Routan any way, I’ll call them “Routan Buyers” and the other group is people considering the vehicle but still undecided, referred to hereafter as “Routan Considerers”.

Routan Buyers have already decided to buy the car and are simply waiting for the car to hit dealer lots. Most will not pre-order since the minivan is not a high demand vehicle and availability should be a non-issue at the dealership. Some may do a pre-order to receive the tuition offer. However, is $1,500 really that much toward the typical cost for college? Not really and even less so for parents with kids that have quite away to go before college making the $1,500 incentive less of the total cost.

Routan Considerers probably won’t be influenced by a tuition incentive. They too may not value an incentive that will take several years to affect a family’s finances. Considerers also won’t be influenced by an incentive that does not lessen the total cost of the vehicle or give them some instant gratification for their choice. But the larger issue is the matter that any minor incentive is unlikely to shift a buyer to make a decision before he or she is ready. Buyers most influenced by discounts and incentives would most likely pull ahead their shopping decision if employee pricing or a low percentage finance deal were offered.

It takes a lot to move an undecided buyer to purchase and few pre-order deals really have the impact to make a considered high-priced purchase more impulsive.

So, the pre-order tuition offer is a futile attempt to drive sales prior to launch. Volkswagen would probably be better off putting less focus on the tuition offer and instead demonstrate to consumers how the Routan is unique from it’s Chrysler and Dodge cousins (all three vehicles are built at the same auto plant in Ontario Canada.)

In my experience and research, the only significant way of generating pre-orders is by restricting supply at or near launch for a highly sought after vehicle. Limited edition models like the Mustang Shelby GT500KR or a VW Golf R32 create excitement for the product. Minivans really don't generate a lot of passionate excitement, unless of course VW actually brought a minivan worthy of consumer excitement like the Microbus concept.

Tuesday, August 19, 2008

Reflecting on the BMW 1-Series Launch

"The media strategy for the 1 Series is all about short, intense experiences," explains Esme Rottschafer, group account director at The Media Company, adding that Cundari developed the creative for the ad (both Toronto-based). "We knew [this process] would be tough to do, but it was an innovative one-off that fit beautifully with the strategy."

Short, intense experiences. The quote above was taken from the coverage of Canada’s Vibe magazine featuring a hidden 1-series on the cover, provided you turn the lights off. Coverage of this tactic was rampant across BMW message boards,, several non-BMW related blogs, and market publications. What Cundari did was generate a buzz beyond just the car. Technique was the buzz with the Vibe magazine cover.

It was a well-executed traditional media placement that transitioned to some great online buzz. BMW’s campaign wasn’t just about creating buzz online; their strategy was to concentrate half of their media budget on online media. “By comparison, executives at BMW of North America say, Internet ad spending for other models ranges from 1 percent to 15 percent of the total ad budgets,” according to the NY Times.

With a target consumer in the late 20s and early 30s, an interesting online implementation was the 1-series Facebook application that let members design their own 1-series in their “What drives you?” auto graffiti contest. It was an engaging way for friends to share different creative ways to make the 1-series canvas their own. It was more than just the typical Facebook quiz or ‘Become a Fan’ idea. Here BMW lets friends create a personal style and isn’t it always about standing out when one is buying a luxury car? Plus it allowed creativity that was simple for anyone to try.

Where the BMW 1-series went wrong with their product launch wasn’t a media placement or website, it was trying to generate exclusivity by writing “Year One of the 1” around the Start Button. Most consumers and brand advocates felt it was a bit too gimmicky.

Wednesday, August 13, 2008

Mini Shows Green and Fun Can Coexist

Green marketing: “Integrating business practices and products that are friendly to the environment while also meeting the needs of the consumers.”

So instead of being bound by a rigid Carbon Footprint calculation, Mini decided to recreate the formula: “Fun to Drive” Factor + Green Factor = Carfun Footprint Score. Even without a hybrid, Mini is looking to position itself better in today’s fuel-efficient consumer mindset and that is what the Carfun Footprint website is all about.

How do you a make a non-hybrid car perceived as green? By trying to extend their brand’s playful style and performance by emphasizing a lesser-known quality, the Cooper’s competitive fuel-efficient engine (base model gets 37 hwy, 28 city.)

What Mini gets right with their Car Fun Footprint calculator are a couple major things. First, they establish a new frame of reference for the consumer by linking green with fun showing how car buyers don’t have to sacrifice style and performance while being cognizant of fuel efficiency, i.e. you can have your cake and eat it too.

Another attractive quality is Mini’s competitive angle. While I may not own a Mini, I can at least learn how well my current car stacks up and can send the site to my friends seeing how their cars rank. Of course, if you want to improve your score there is an Improve link that let’s you build & price a new Mini Cooper.

The green motoring tips link sends you an email providing fuel efficient driving tips no matter what you drive. Of course Mini reminds you right up front that “the best way to improve your Carfun Footprint is to drive the 37-mile-per-gallon Mini Cooper.”

An improvement could be a Carfun Footprint challenge with friends instead of just sending the link to a friend. The site could forward your car’s score to your friend and challenge your score against theirs seeing who ranks best on Mini’s site.

Overall, the site is a great way to demonstrate the fuel efficiency of Mini’s products. In a market that is concerned with fuel economy but not willing to give up everything for it, Mini has hit a cord with their playful Carfun Footprint site.

Hyundai's Phaeton?

One of the most compelling stories happening right now in automotive marketing and brand development has to be Hyundai Motor’s attempt to change to a luxury brand. As USA Today puts it, Hyundai is trying to become a brand for “thrifty rich people.”

Unfortunately, for Hyundai, performance numbers or amenities don’t sway luxury buyers as much as image, according to Tom Libby of JD Power’s Power Information Network. It’s the attempt of a brand to redefine itself as luxury that really is a major hurdle.

Volkswagen undertook one recent example when Ferdinand Piëch tried to remake VW into a luxury brand by going up market with some of its product decisions. Of course, the VW example is an odd one since VW already has Audi as a luxury brand; that aside, VW looked to stretch its brand image most notably through it’s introduction of the Phaeton vehicle. Like the Hyundai Genesis, the Phaeton was a singular product designed to take VW into luxury territory.

From BusinessWeek:

Perhaps no Volkswagen model more embodies the company’s odd product strategy over the last decade more than the $75,000-$90,000 Phaeton sedan. The car, which VW chairman Ferdinand Piech developed to go up against the Mercedes S Class and BMW 7 Series, has been a flop in Europe and was discontinued in the U.S.

But why was it a flop?

Most of the issues VW had with launch had to do with convincing the automotive press that this was a serious contender to BMW and Mercedes. Hyundai is having a similar up hill climb getting the press to see the Genesis as a contender to Lexus, BMW, and Mercedes. Product strategy contends with the brand shift by throwing all available luxury gadgets, better interior materials, and overall improved fit and finish as the brand moves up market.

Even with all the extra goodies at a competitive price point the Phaeton failed and mainly because the dealer network and prominent VW badge sank the strategy.

Dealers had troubles meeting the needs of a luxury consumer who had higher expectations of customer service than a Jetta owner. Hyundai is sure to suffer a similar issue. Luxury dealerships have become places to enjoy your time at. When I bring my wife’s Lexus in for service I am offered a cappuccino, free WiFi, and sit in a leather seat near a hearth fireplace. Somehow I doubt Hyundai will be upgrading their dealerships to cater to a luxury consumer. Right or not, luxury consumers expect special treatment from their brands, which is all part of why they are willing to spend more.

The badge issue is an interesting one as it pertains to Hyundai. Part of Hyundai’s move up market has included a redesigned grille that has removed the Hyundai logo from only the Genesis and replaced it by a flowing chrome look reminiscent of a Mercedes. There is no doubt that the logo removal is there to remove consumers from their biases of Hyundai. VW’s Phaeton had a prominent VW badge in front and was often noted by journalist as a hampering issue for the vehicle to go up market when parked next to a sea of German luxury cars. Hyundai has recognized the issue and is addressing it in a stealth way; they know their logo isn’t helping any luxury perception of their brand.

So, how about the website? While I keep hearing Green is the new Black, apparently, Hyundai didn’t get the message and went with a very traditional black is luxury web presence.

“It’s beauty through functionality,” says the cliché deep-voiced narrator. The site communicates vehicle features through brief one or two sentence statements. There is no direct language about the car being a luxury vehicle; instead, Hyundai tries to communicate luxury through stylized content areas, comparisons to luxury makes (Mercedes to be exact), water motifs, images are uncluttered, and sound is similar to a lobby at the W Hotel.

The Genesis events section of the site shows some nice extensions to the experiential activities going on to launch the car. There is a tour, videos from the tour with consumers showing their surprise about the vehicle’s luxury elements, and there is a Genesis Discovery Challenge quiz that quizzes one’s knowledge of opulent tastes and vehicle attributes by mixing cultural questions with Hyundai Genesis.

It is an interesting challenge for Hyundai and they may have an edge over the failings of the Phaeton since the Phaeton was in the $70k price point while the Genesis is a more palpable $30-$40k car. But even a thrifty luxury buyer still wants prestige and convincing consumers Hyundai is an image brand is not an easy task. Personally, I feel Hyundai should’ve taken the new grille and started a luxury brand similar to the success of Lexus, Acura and Infiniti. There Hyundai could start fresh and come to market with a couple starter vehicles to build their luxury voice from instead of having to show the Genesis along side a Hyundai Accent.

Tuesday, August 5, 2008

Leasing is Surprisingly Alive and Well

While Chrysler is exiting the leasing business, some manufacturers are increasing their leasing promotions online. Well at least one manufacturer is increasing their leasing efforts using a pre-roll (commercial shown prior to video content on a website) on Wall Street Journal dot com. Aston Martin is promoting their DB9 Volante convertible model with a "surprisingly affordable lease offer." I tried that line on my wife this evening telling her it is a "surprisingly affordable" car now, but she didn't buy it. So, in an environment of credit consolidation, including today's announcement of HBSC pulling out of the US auto loan market, Aston Martin soldiers on with a $1,699/month lease rate on the DB9 soft top.

Saturday, August 2, 2008

What's the Auto Marketing Blog?

So how did you end up here? An interest in cars? An interest in marketing? Either way you're at the right place. This blog will be my attempt to follow trends in the Automotive Marketing space, focusing primarily on the U.S. but I'm sure I'll occasionally cover some International trends as well. I hope the blog is informative, intelligent and provides a good laugh at times and I hope you too find reason to post some responses and thoughts of your own as you read posts here.

I should probably explain who I am. I am currently a Senior Digital Brand Strategist with Wunderman (part of the WPP marketing firms) where I work on digital projects for Ford, Lincoln, and Mercury out of Dearborn, Michigan. I have worked for a few other automotive firms including Chrysler and General Motors where I also participated in a variety of digital marketing efforts. My professional career is now 14 years long, but not all in automotive, in fact I have worked for or with the following firms: Pfizer Pharmaceuticals, Microsoft, Honeywell, and several private firms. Educationally, I hold a MBA from the University of Michigan and a Bachelor's degree in English Literature from Hillsdale College.

A brief personal automotive history, I started my love of cars with probably the worst car ever built - a Chevy Vega - I bought for $300 back in the late 1980s. That didn't last long, after weeks of trying to fix the car's brakes, replacing 2 master cylinders and having no luck ever getting it resolved, one rainy evening in Portland, Oregon I made a sharp turn and pressed the brake pedal to the floor and glided ever so gently into a light post. Oh well, life did get better as I later owned a beautiful 1964 1/2 Ford Mustang and currently own a 2007 BMW 335i convertible. After a rough start, I am now driving my 'reality' dream car. My fantasy dream car is a 1961 Ferrari GT 250 California, but then again whose isn't if you have ever watched Ferris Bueller's Day Off?

I am definitely a BMW brand advocate, but I love all kinds of makes and their contribution to automotive history and am definitely a car nut, but I'm also a marketing nut. Combining my two loves is a passion of mine and that's why I think this blog will be a compelling read for many who stop by. Whatever the original reason, I'm sure you'll find what I write compelling from many angles.

Well enough pontificating. It's time for me to get a real post on this blog. Thanks for stopping by and let me know what you think, how I can improve the blog, or if you have any topics to suggest.

Christopher Baccus

PS - While I do work for Wunderman, this blog is a collection of my own thoughts and in no way represents the views or perspectives of Wunderman or any WPP company. I also will not cover any in depth analysis of Ford, Lincoln, or Mercury's work since I am often involved directly or indirectly in strategic efforts for these companies and will not provide any insight to where that work is heading directionally as it would intrude upon my work with our clients.