Archive for the ‘Marketing’ Category

I haven’t reviewed a full-size pickup in years because I assume that my tastes are so different from those of the typical pickup buyer. My review simply wouldn’t be relevant to them. Or so I thought. I might be wrong.

Today I attended the reveal for GM’s redesigned full-size pickups, the Chevrolet Silverado and GMC Sierra, which will launch next spring as early 2014 models. For the most part the presentations were the usual “more of everything.” Whatever people might want in a truck, these new pickups will have more of it. In particular, they’ll have more power (the actual specs to be revealed next year) and better fuel economy courtesy of a combination of direct injection (enabling high compression), variable cam timing (with a single cam still in the block), and seamless cylinder deactivation (both the 4.3-liter V6 and the 5.3-liter and 6.2-liter V8s will cruise on only four cylinders). They have more functionality courtesy of bigger, easier to used knobs and switches, more interior storage spaces than ever, steps built into the rear bumper, and LEDs built into the bed (to assist when loading and unloading in the dark). A torsion rod built into the tailgate makes for easy, slam-free opening and closing. The rear doors on the extended cab are now, as on the RAM, forward-hinged, for easier entry and exit They have more comfort in the front seats via dense, higher quality foam. (Likely for cost reasons, the rear seats remain relatively soggy.) They have more luxury in thoroughly upholstered door panels and stitching on the instrument panel. The “aluminum” trim in the GMC is actually aluminum. The superior quietness of these trucks was stressed more than anything else during the presentations.

(more…)

Inputting the interior dimensions for the redesigned crossover, the combination of 43.1 inches of front legroom and 36.8 inches of rear legroom surprised me. I’ve been in the new Escape, and its rear seat is considerably tighter than most in the segment. Yet these specs from the brochure (and various popular car sites) suggest it should rank among the roomiest.

Suspecting a typo, I checked the official specifications sheet on Ford’s media site. There they have not one but two front legroom specs, 40.4″ and 43.1″, the latter labeled “Max legroom.” This makes some sense, as there are two legitimate ways to measure front legroom, one with the front seat set for an x-percentile male (which generally yields a number in the 40-to-41-inch range) and another with the front seat as far back as it will go. Most manufacturers publish only the first spec, but others (most notably Nissan and Hyundai) often publish the latter.

So what’s wrong with Ford’s technique? When other manufacturers release the max spec, they also measure rear legroom with the front seat all the way back. Ford, on the other hand, is providing front legroom with the front seat all the way back plus rear legroom with the front seat pushed forward 2.7 inches. I’ve entered specs for hundreds of different cars over the years, but I can’t recall anyone doing this before.

If Ford had released two sets of numbers, I’d praise them, as the Escape could then be compared to competitors measured with either method. But the logical complement of a “maximum front legroom” spec, “minimum rear legroom,” is nowhere to be found. They’re only using the alternate method when it makes their car look better. Not only this, but in the numbers car buyers will see they’re combining one stat measured using one method with another measured using the other to misleadingly suggest that the new Ford Escape’s total legroom is nearly three inches greater than it actually is. This isn’t a trivial amount. It’s enough to move a car from near the bottom of a segment to near the top.

Ford has already recalled the Escape for a fuel line issue. Perhaps they should recall the brochures as well?

As FIAT started to take over Chrysler, the executives assigned to the American company cast about for ways to reverse its declining sales. New products often help but, having just traveled through bankruptcy, they had nothing new to offer. But they could pretend to have something new by putting new labels on the old bottles. So, part way through the 2010 model year, for Dodge cars, minivans, and SUVs they abandoned boring trim names like SE and SXT in favor of more colorful ones like “Mainstreet” and “Uptown.” Apparently this little experiment didn’t work out. For the 2012 model year the funky trim names are gone. In their place? SE, SXT…the same ones they replaced.

Yes, some people are paid a good salary to come up with this stuff…

Realizing that people weren’t buying cars because they feared losing their jobs, Hyundai now includes job loss insurance in the deal. Buyers who lose their jobs within a year taking delivery can return the vehicle to the dealership without damaging their credit ratings. An insurer pays off the loans. One problem with this scenerio: the insurance only covers the first year of ownership, while the loan likely runs for four or five. Still, Hyundai says it has helped move the metal.

I’ve been using gmail, which serves up ads based on what’s in your inbox. Recently they’ve been serving up an ad for the Chevrolet Traverse. The claim: “Traverse Outperforms Almost All its Competitors.” Almost all? Well, why shouldn’t I buy the one it didn’t outperform?

A message you won’t be receiving from TrueDelta: “providing better vehicle reliability, fuel economy, and car pricing information than almost all other automotive websites.” If you don’t have a better way of doing something, why bother doing it?

No word has been more abused by the auto industry than “Limited.”

The implication–that the manufacturer will be producing only a small, fixed number of vehicles, so it’s special–has rarely if ever actually been the case.

Instead, production is limited to the number they can sell. And, in the case of the Chrysler Aspen Limited, which inspired this post, perhaps a few thousand more than they can sell.

So why keep abusing using the term? Apparently it still has an allure for many car buyers. More often than not the “Limited” is at least an upper-level trim. The Aspen is an exception: until the Hybrid was introduced, the Limited was the only trim level.

Some cars are produced in strictly limited numbers. But in these cases you’ll usually have a plaque attesting that your car is, say, ”579 out of 1,500.” Or at least a piece of paper.

Why does this matter? It’s just a word, after all. But if a manufacturer shows so little regard for a word, then what else are they disregarding? If their use of this word is so obviously false, then which of their claims should be believed?

The theory behind market segmentation assumes that people have a certain set of needs and thus that when looking to buy something like a car can be expected to buy a specific type of product.

Reality isn’t nearly so clean. Although I continue to find market segmentation quite interesting (how might car buyers be grouped?), and believe there’s a role for it to play, the traditional view of car buyers’ needs as clear and unchanging just doesn’t hold up. Instead, people’s needs are often highly fluid, especially as they play out in the selected vehicle.

I learned this a  few years ago when someone asked me if they should buy a Subaru WRX or a VW GTI. He didn’t personally feel any need for a fast car, but he wanted something that his friends would think is cool and noteworthy. He arrived at a better solution without my help: a Toyota Prius. Which did fit his basic needs, demonstrates the unlikely alternatives that can result even starting with the same set of needs.

This month I came across a similar switch. Someone who’d been driving a large 425-horsepower Chrysler SRT8 swapped it for a tiny 70-horsepower Smart ForTwo. It’s hard to imagine two more different cars. Yet at this point I’m no longer surprised by such a switch; major changes from one vehicle to the next happen too often.

This week’s Automotive News includes an article (subscription required) on upcoming ads for the new 2008 Chevrolet Malibu. Apparently, Chevrolet is going to attack the erroneous “belief system” that American cars cannot compete.

So far, so good. But one sentence I must really wonder about: “It takes the Toyota Camry, Honda Accord and Nissan Altima to task for quality and reliability, says LaNeve.” (LaNeve is GM’s marketing chief in North America.) Are these ads really going to criticize the Camry, Accord, and Altima on the basis of reliability?

If GM is going to do this, then the reliability of the new Malibu had better be stellar. TrueDelta’s current data suggests they’re on thin ice. The latest Camry and Altima are just average in reliability. But then so is the Saturn Aura, the car to which the new Malibu is most closely related.

Will it do GM any good to essentially point out, “They’re as average as we are.” Maybe a little. But such ads could only be very effective if the Malibu were more reliable, not just roughly tied for average.

Of course, the new Malibu hasn’t yet gone on sale. So it could end up about average. Or much better. Or much worse. If the latter somehow happens, these ads could backfire. Again, assuming that LaNeve meant to say what he seems to have said.

Note: Toyota’s Jim Farley ended up with the Ford job. The Wilhite rumor turned out to be incorrect. 

Ford has long had some of the worst marketing in the industry. Their brand identity has been broad and vague. Their product lineup has been full of overlaps and gaps. Their targetting has been somewhere between imprecise and non-existent. And their advertising has been consistently awful, with the partial exception of the campaign that launched the Focus.

Well, Ford might finally be getting the marketing talent it has long needed. Cisco Codina resigned last week. And Automotive News just reported that Steve Wilhite has resigned from Hyundai USA, and might be showing up in the top marketing job at Ford that Codina vacated.

Who is Steve Wilhite? He first made a name for himself by helping bring VW back from the dead in the U.S. As head of VW’s U.S. marketing in the late 1990s, he played a major role in the “Drivers Wanted” campaign and the launch of a new lineup spearheaded by the New Beetle. In 1998, BrandWeek named him “Marketer of the Year.”

From VW, Wilhite went to Apple in 1999, where he did not fare so well and lasted only a year or so. Whether responsible or not, he received the blame for tepid sales growth. He resigned, and Jobs took back responsibility for marketing.

After Apple Wilhite went to another job, at a healthcare firm, before ending up at Nissan USA in 2001. There he served as VP of Marketing as that brand acquired new life in the U.S. Of course, an entire new lineup of products with very competitive styling and performance was the main reason the brand came back, but the marketing hasn’t been bad. I’m personally not a fan of the _shift campaign–it’s way too conceptual–but this appears to have been championed by Ghosn and initially resisted by Wilhite.

Renault-Nissan CEO Carlos Ghosn was pleased with Wilhite’s achievements in the U.S., and in 2004 appointed him head of Nissan’s global marketing, with a new office in Tokyo. Reading between the lines, the iconoclastic, outspoken Wilhite probably did not fit in well at Nissan’s Tokyo HQ. In an insightful Detroit News article, he talks about improving his patience in order to work better in Tokyo.

This might explain why he left Nissan for a COO post at Hyundai USA in August 2006. In the press release he said, “I’m thrilled with the opportunity to return to Southern California.” But Hyundai has failed to meet ambitious sales goals in the U.S., and Wilhite may be taking the blame for that. In his defense, I’ve often heard that Hyundai’s Korean HQ is very difficult to work with, and gives the U.S. unit very little autonomy. So Wilhite was likely no happier there than he was at Nissan’s Tokyo HQ.

Which brings him to Ford. Or, actually, back to Ford. It seems that Wilhite began his career at Ford.

Ford could certainly use Wilhite’s best work. His strength is supposedly in crafting a strong identity for a brand, and Ford needs one. The big question is: will they give him the room to work that Hyundai did not? Will he fit in well with the Mulally-Fields team? Might Fields feel threatened by this potential replacement? Time will tell. I’m certainly looking forward to see how this one unfolds. If only I never have to see another awful ad from Ford, Wilhite will have earned every cent they pay him.

For the first decade of Saturn’s existence, “no-haggle pricing”–the sticker price is the price everyone pays–made sense. It made Saturn dealers very easy to work with, and the brand’s reputation benefited. But today, despite an all-new product line-up, Saturn is falling short of its sales goals. The products are solid. The problem: no-haggle pricing.

Why did no haggle pricing work before, but not today? Two reasons: discounts have grown large everywhere else, and Saturn’s products now have close relatives at other GM divisions.

Consider the Aura and the Outlook using TrueDelta’s vehicle price comparison tool. (These model names should be ALL CAPS, but that gets obnoxious.) Despite all of the PR about supposed German origins, the Saturn Aura sedan is most closely related to the Pontiac G6 and Chevrolet’s 2008 Malibu. Compared to the Pontiac G6 GXP with a few options to bring it up to the Aura XR’s standard equipment level, the Saturn lists for about $100 less. Sounds quite good considering the fancier exterior and more upscale interior of the Aura. But the rebate (which only became part of the Saturn way in recent years) is currently $500 higher on the Pontiac, and the gap tends to be at least this large year round. Still, the Saturn would be just $400 more if both sold at list, a very fair price for the extra bling.

But of course both don’t sell at list. Instead, the G6 can probably be bought for around invoice. Let’s assume $250 over invoice, to be safe. At this price, the Pontiac G6 GXP will cost about $1,500 less than an Aura XR. Even adjusting for the Aura’s additional features, the gap remains a sizable $1,200. And the upcoming new Malibu will be cheaper still.

The Saturn Outlook crossover faces an even tougher battle against the GMC Acadia, since while the G6 is positioned below the Aura, the Acadia is positioned above the Outlook. The Acadia SLE lists for $1,500 more than the Outlook XE. But in this case only the Saturn has a rebate, for $500. So the gap at list price is $2,000.

So why is the GMC far outselling the Saturn? Well, partly because there are more GMC dealers than Saturn dealers. But the reason many buyers have given me (especially back when neither had a rebate) is price. The GMC might start out $2,000 higher, but it includes about $700 more in standard equipment, and at $500 over invoice (it’s a stronger seller than the G6) it’ll cost about the same as the Saturn. More stuff, higher status brand, same price (even with the rebate on the Saturn). The outcome is predictable.

GM has tried to compensate for Saturn’s no-haggle policy by reducing the dealer margins on Saturns and making the list prices a bit lower than they’d otherwise be. But with today’s large discounts, the pricing adjustment isn’t large enough.

One solution would be to reduce the prices on Saturns, so that at list they’d be more competitive with both their siblings and competitors from outside GM. But this requires knowing in advance how large the discounts will be on competing vehicles. Which isn’t easy to do–hence the $500 rebate on the recently introduced 2008 Outlook.

A simpler solution might be to abandon no-haggle pricing. It worked before the era of huge rebates and discounts, back when Saturn’s products were truly unique. But today, it’s hurting them more than it’s helping. Cars and SUVs that seem attractively priced at sticker don’t seem so attractively priced when out-the-door prices are compared.