What If? Shaping a New Automotive Marketing Model

I was lucky enough to be invited by my friends at PointRoll (pointroll.com) to moderate a panel at the JD Power Automotive Marketing Roundtable yesterday.  As anyone who has ever read any of my blog posts knows, the topic 'Is the three tiered automotive marketing model obsolete?' was near and dear to my heart.

From left: Scot Cottick, Mike Dillon, Kristi VandenBosch, Ciaran Bossom,  Michael Brennan

The awesome panel (pictured above), while not agreeing on everything, seemed to agree that the three tiered model creates a painful disconnect between the brand and the customer that is most apparent at the dealership level.  They identified a need for greater collaboration in content development and data and platform sharing as the building blocks for a new model. 

After the discussion was over, PointRoll asked me to answer an open ended question...'What if?'. My answer was so lame that I've already forgotten it.

But, being around so many smart people yesterday gave me so much food for thought, that after feeding my brain with their inspiration, I've created a 'what if list' that begins to imagine how automakers can work with their dealer networks to accelerate innovation and develop cutting edge retail experiences:

1. What if dealer associations repurposed their advertising budgets to fund the development of common platforms and customer interfaces to facilitate a seamless, end to end brand experience across all geographies?
2. What if automakers redirected dealer incentive dollars to only support online transactions?
3. What if automakers and dealers looked outside the category to brands like Uber and Apple for ideas to inspire them to seamlessly move customers between digital and physical points of experience? 
4. What if automakers used technology to innovate their manufacturing processes to allow customers to pre-order and customize their vehicles at a guaranteed price and dealer margin?
5. What if automakers looked to travel and hospitality brands to develop programs that reward customers loyalty and tiers of vehicle usage with special perks and guaranteed trade in values?

While this list may not have all the answers, it seems that there is so much potential for technology to drive innovation in automotive marketing and experiences.  All it takes is a willingness to let go of obsolete practices, and take a leap of faith into the future.

What's In a Name? Why 'i' stands for 'we' at Apple.

Prior to today's Apple reveal, everyone was anticipating an iWatch...and nobody got one.  Instead, Apple introduced the 'Apple Watch'. They also introduced 'Apple Pay'.  Why move away from the 'i'? Why the shift?

A cynical point of view could be that Apple is trying to reassert the equity of their master brand into their new offerings, as the 'i' prefix has begun to overshadow the master brand.  But Apple rarely puts ego first and purpose second. So what is it?

Let's go back to the original 'i' prefix.   It first appeared in the iPod. Which was quickly followed by iTunes. iTunes became the hub for iPod, iPhone, iPhoto and iMovie.  Essentially an ecosystem built for sharing.  Music, Pictures, Video, and Conversation...in a word, content.  The enhancements announced for iPhone6 are all about this.  Larger screen, better camera and video capabilities....all about sharing content.

Now let's look at Apple Pay and Apple Watch.  These products extend Apple's footprint into two much more personal categories...finance and health.  Categories where sharing is not necessarily embraced.  Categories that might require a new, more private ecosystem.

So, perhaps the Apple prefix has a real purpose.  During the course of the event today, Tim Cook kept talking about enriching people's lives.  He also put quite a bit of emphasis on security and privacy.  

Last, let's look at the invitation itself...'We wish we could tell you more'.  This all points to Apple being a trusted confidant in your life.  

So, clearly, i is for we, and Apple is for me.

Establishing the New Automotive Marketing Ecosystem. A 'No More Tiers' Formula?

As digital channels fundamentally change the way customers make purchase decisions, is the traditional three tiered automotive model obsolete? Probably yes.  Will the three tiered model be going away anytime soon?  Probably not.

Why? It might help to go back to the beginning.

In 1898, E. St Elmo Lewis, an American marketer created the concept of the purchase funnel. It is based on the assumption that customers make decisions in a linear fashion through a process of elimination, from awareness to a consideration set to a single preference and purchase. Automotive marketers have used the funnel as the foundation for the conventional 3-tiered automotive marketing model in which manufacturers, dealer associations and individual dealers each have discrete 'buy this, 'buy now' and 'buy here' roles. A tier to tier 'hand-off' occurs as customers move down the funnel. 

And these tiers go hand and hand with a franchised dealer system, in which dealers and manufacturers sometimes see each other as necessary evils. Thus, while originally modeled on customer behavior, the tiers now serve to 'protect' individual interests, ostensibly allowing each entity to do what they do best.

And thus, as more and more automotive marketing activities move to digital channels, they move in tiered silos. But numerous studies have confirmed that customers are no longer behaving in such an orderly fashion; that, from the customers perspective, there are no more tiers. Rather, customers re-considering their 'upper funnel' 'buy this' decision right up until the moment they sign on the dotted line. And there is a strong possibility that the brand they ultimately purchase was not even on their original shopping list.  

And so, we have a system deeply rooted in comfortable conventions, supported by  profoundly entrenched institutions that evidence suggests is out of synch with today's reality. Not only does this create incredible inefficiency, but it also begs asking a fundamental question:  What if we started from scratch?

From there, a cascade of new questions arise.  A few:

• Would we create a collaborate ecosystem void of an 'us' and 'them' mentality?
• Would we be able to fundamentally change the customer experience?
• How would we fund the capital investments required to build a data engine to drive all marketing decisions?
• Who knows the customer best, and who, if anyone should owns the customer relationship?
• How can we optimize the total spend, regardless of source of budget?
• How would our media choices change?
• What role, should dealer associations have?

I don't have all the answers, but the brand who figures it out will define a new customer experience. 

I will be moderating a panel at the JD Power Automotive Marketing Roundtable on this subject next month.  The answers should be interesting.

Making The Grass Seem Greener: Strategies for Branding Marijuana

Last week, the New York Times ran the first ever ad for marijuana (in a traditional publication). And while this first ad was surrounded by controversy, it is not likely to be the last.  All indications are that marijuana is undergoing a transformation from illegal substance to legitimate business. By some estimates a $100 Billion plus business.  And this is likely to result in the transformation of mom and pop sellers into big brands.

What might that look like? How can brands selling a product that might otherwise be regarded as a commodity distinguish themselves and build added value?  By applying some of the basic tenets of brand building and borrowing approaches from other categories, one need not partake in the product to imagine how future marijuana brands might be created.

A universal rule of branding is to look inside and examine your brands true DNA.  What is special about your brand that can differentiate it in the marketplace? So, it's likely that we'll hear brand stories of the unique characteristics of 'the rich Humboldt county soil', or that the brand was born from a 25 year old tradition of being 'lovingly hand crafted, hand rolled, and personally tested to ensure the utmost quality'

Terroir?

Taking a page out of the packaged goods playbook, some brands might try to differentiate themselves through special blends, formulas, or proprietary ingredients with unique benefits. Munchie free marijuana, anyone? 

Secret Ingredient?

A time honored branding strategy for brands with little true product differentiation is to associate with a lifestyle. An easy way to accomplish this is to borrow interest from celebrity endorsements. And there are so many ways this could go. From Willie Nelson to Lady Ga Ga, pot brands will be able to claim distinct positions in the market by drafting off of celebrity images.

Spark your creativity?

Categories as diverse as beer and jewelry build brands by creating and granting permission for special occasions. Surely, there is an opportunity for a marijuana brand that enables indulgence. What better way to do that than by throwing a funny brownie party?

Time for a celebration?

Finally premium brands typically add value through experiences that extend from the product out. So, it is likely that some brands will choose to lead their audiences into deeper experiences by creating fully immersive destinations where patrons can go for a respite from their everyday lives. Wouldn't you pay more for a personal 'Ganjista'?

 A 'Ganjista' to guide you?

While these are just a few examples of the types of approaches that marijuana brand owners might take, those who understand their brands and their audiences will likely be able to transform a $100 billion dollar commodity into a $200 billion dollar category of brands.

Rebranding Malaysia Airlines: Substantive Change or Perfuming the Pig?

This week there were reports that Malaysia Airlines is planning to 'rebrand' itself. The efforts are reported to include a possible renaming of the airline.

Renaming? Really?  

Sure, Malaysia Airlines has suffered more than its fair share of tragedy this year, but can renaming really help repair the damage? Or might it just make matters worse?

As noted in its annual report, Malaysia Airlines was investing in an advertising focused brand initiative prior to the tragedies. One of the objectives was to raise brand awareness. While not divulging absolute numbers, the report stated that unaided awareness had increased by 32% as a result of these efforts. 

Ironically, as a result of the recent tragedies, Malaysia has likely earned more global media exposure than their advertising budget could ever deliver. Because of this, Malaysia Airlines brand awareness has probably increased astronomically in the last several months. At this moment, it might very well be one of the best known airline brands in the world...for all the wrong reasons.

And there in lies the rub. If Malaysia Airlines chooses to change its name, this decision will receive unprecedented media coverage. What ever the new name or logo, the new airline will continue to be referred to as 'The airline formerly known as Malaysia' long after the name change. And the image of the former Malaysia Airlines will be forever frozen in time...the worst time of its existence. And the new airline name will likely be regarded by many as a cover up of something sinister. And this will be amplified exponentially in social media.

So what should Malaysia Airlines do? 

First, they should clarify their intent for rebranding. They should ask themselves what they are trying to accomplish, and what they are willing to do to get there. 

The fact is that the reason Malaysia Airlines launched its brand advertising last year is that had problems before MH 370 and MH 17 shone a spotlight on them. Malaysia Airlines lost money in 2011, 2012, and 2013, with a cumulative loss of around 1.3 billion U.S. dollars. 

Malaysia Airlines operates in the geographic growth center of aviation where low cost carriers are making a land grab for the future. In its annual report, Malaysia Airlines states that profit improvements will be driven by attracting more lucrative business travelers. To do so, Malaysia needs to distance itself from the lost cost carriers and be perceived as a top tier airline brand.

But right now, facts suggest that Malaysia might just be stuck in the 'murky middle'...not quite top tier, and not quite low cost: 

• While Malaysia's has an international footprint, the bulk of its flights are regional, mainly serving the same Asia Pacific routes that the low cost carriers serve. 
• While Malaysia has 6 state of the art Airbus 380's, 62% of its 108 aircraft are smaller 737's with few creature comforts. 
• These cramped 737's are frequently used on medium haul international routes, like the 4 hour flight from Kuala Lumpur to Hong Kong.
• The average age of Malaysia Airlines 777's is 14.6, making it one of the oldest fleets of 777's flying today. 
• While some of Malaysia's long haul aircraft's business class seats convert to fully flat sleepers, many have angled sleepers, or worse, old fashioned reclining seats. 

The reality is that sometimes customers get a low cost carrier experience and sometimes they get a top tier experience. But mostly, they are likely to be confused about where Malaysia fits in the market. 

Which Business Class Experience Today?

If Malaysia Airlines is to survive, it needs to consistently solidify its position as a top tier brand. This will not happen if the 'rebrand' is limited to a new logo and a sparkling new advertising campaign. To paraphrase Bill Bernbach, 'Nothing kills a bad brand faster than good advertising.' Instead, Malaysia must focus on creating a consistent and desirable customer experience on every flight. Only then will an advertising campaign help.

And, in fact, by upgrading the inflight experience, Malaysia might actually be able to allay safety concerns as well.  Studies show that there is a correlation between perceived airline cleanliness and perceived safety.  The logic being that if an airline is careless at cabin maintenance, then it will also be careless about routine mechanical maintenance. 

So can Malaysia Airlines be successful at mitigating the brand damage sustained by MH 370 and MH 17?  Only time will tell.  But what Malaysia chooses to do now will have significant impact on the outcome.  Because in the end, brands can't really reposition themselves.  They can only behave.  Customers will do the positioning for them.

Free Lipstick Samples For All!

Why 'Marketing to Women' Initiatives Are a Bad Idea

Yesterday, I cringed as I read an article in Ad Age about how automotive marketing aimed at women has evolved from portraying them as 'soccer moms', to portraying them as 'professionals'.  

I thought...here we go again, talking about 'marketing to women'.  Back in 1992, when I worked for Nissan, there was a big push by some automakers to market to women because they 'under indexed' with their brands. Typically, these brands were known as 'performance' brands. Their solution usually involved 'softening' the message to focus on safety and convenience features.

In defending their lack of targeted women's initiatives, Nissan's then VP of marketing, Jules Clavadetscher said, 'I don't think we need to send out lipstick samples to get women into our showroom'. The quote was picked up by many publications, and portrayed as evidence that Nissan was out of touch with women.

But 22 years later, I think there was much wisdom in Jules' comment. For the fact of the matter is, any marketing that attempts to paint 51% of the population with a single brush will always come across as a patronizing stereotype. 

To illustrate the point, let's look at my next door neighbor Cathy and me.  She and I are exactly the same age.  We both have worked all our lives in professional jobs. Neither of us had children.  Both of us raised step children. So many similar experiences.

But that's where the similarities end.  She drives a gas guzzler, while I favor my electric car.  She loves traditional decor, and purchases elaborate fabrics and draperies for her home.  I'm a modern minimalist, who shuns window coverings.  When we go out to dinner together, she wears flowing pants outfits, while I favor tailored dresses. Her phone is a Samsung, mine, an iPhone. She drinks light Rosés, I prefer big Chardonnays. The fact is that it is quite unlikely that a single brand or associated message would appeal to both of us, just because we are women.

Instead, we choose brands that align with our personal values and tastes.  Some of these align with the values and tastes of other women, some with those of men. 

Realistically speaking, no brand or category is going to appeal to everyone.  There will always be higher and lower indexing groups of people. And because women represent the majority of the population, brands that index low with women still have a sizable number of women buyers.  So brands who try to equalize any inequities, be they demographic or psychographic, may end up doing themselves more harm than good, as they are likely to lose their point of view and core audience in the process.

A classic example is 'New Coke', Coca Cola's 1985 attempt to appeal to younger buyers who were eschewing Coke for Pepsi. But those customers were buying into the youthful appeal of Pepsi, and not necessarily the product attributes. Hardcore Coke loyalists protested vehemently. Thus, New Coke was failure from day one.  Luckily, Coca Cola reacted quickly enough to prevent long term brand damage, but the entire effort was none the less a marketing debacle.

'Pepsi Generation' Appeal?

When Disney opened its 'California Adventure' theme park, it was designed to appeal to teens and adults who were more likely to visit Universal Studios or Magic Mountain than Disneyland.  The park cost $600 million to build. It contained thrill rides, but lacked the 'magic', storytelling and place-making that its core family audience loved and that defined anything Disney.  And the teens and adults who had previously shunned Disney continued to stay away. As a result, California Adventure flopped, and negative word of mouth began to erode Disneyland brand value. Disney also realized the error of its ways, and revamped the park..spending $1.1 billion dollars to 'Disney-fy' it.

Disney or Magic Mountain?

So what's the lesson here? How should brand owners approach women?  The simple answer is, as people. People who may or may not have values and behaviors aligned to their brand values.  So instead of focusing on women as a target market, brand owners might want to  look inside to understand who they are, and behave consistently to demonstrate their truths. Their audience, be they male or female, blue eyed or brown eyed, will find them. And brands that do this well usually have fiercely loyal core customers who become evangelists who help spread the word to others who share some of those values. And this is how healthy brands grow...by expanding their audience from 'core to more'.  And, for most categories, close to half of those 'more' are likely to be women.

Why Tesla Will Never Be A Successful Car Brand

Because it's a technology brand

An old proverb states,  'If it walks like a duck, quacks like a duck, looks like a duck, it must be a duck'. 

 
So anyone studying Tesla should not have been surprised last week when Elon Musk announced that he would make Tesla patents available to competitors. Why? Because from the get go, Tesla has done nothing but walk, quack and look like a tech firm. Musk has eschewed all conventional automotive category behaviors in favor of technology behaviors. 

Economies of Scale vs Innovation Trickle Down?

First, let's look at the way Tesla has approached fostering electric adoption. Let's compare that approach to Nissan, the leading pure all-electric offering from a conventional car company. Both brands have professed a long term vision of mass adoption of electric cars. But each brand has selected their own approach, apparently informed by the lens of their respective categories. 

Since Henry Ford invented the assembly line, car brands rely on economies of scale to drive profit. That's why Nissan chose to aim at the heart of the market, in hopes of ramping up volume quickly to ensure that profit targets would be met through the achievement of volume targets. Volume targets meant that the offering would need to be affordable.  Being affordable meant that Nissan would need to make choices. One choice was to eke out as much driving range (100 miles) as they could with lower cost technology. Think Ford Model T. 

Because technology brands believe in 'trickle down' to drive profit and eventual volume, Tesla chose to aim squarely at early adopters to bring the very best technology to market and then built a decidedly premium offering around that technology.  In doing so, they were able to offer a driving range that is almost 3 times as great as Nissan....at close to 3 times the price. The idea is that, with further innovation, today's technology will become cheaper over time and new technology, with even greater driving range, will take its place in the premium slot.  And because of the halo created by the original premium offering, a mass audience will covet cheaper versions with the original technology, since it is now attainable. Think iPhone 5C.

Hardware vs Software?

The sophistication of new cars means that they are more like mobile devices than analog machines, yet recalls, even when they involve software glitches always require a trip to the dealership. This is because conventional car wisdom views dealership visits as opportunities to sell additional services or even a replacement vehicle. And that makes franchisees happy.

When Tesla was under investigation for vehicle fires last year, it was determined that the low vehicle stance created a risk to the battery casings from road debris. Tesla chose to fix the problem by sending out wireless software upgrades that adjusted the height of the vehicle. No dealership visit was necessary. And because Tesla has a adopted a more tech-like sales and service model, no franchisees were unhappy.

Product vs Ecosystem?

In the automotive business, product is king. Build a great one, and they will come.

But tech brands are much more likely to operate in an environment where products depend upon new infrastructures, connectivity and content. Thus tech brands belong to business ecosystems in which brands serve multiple roles, and form alliances to accelerate innovation. Sometimes these alliances are with suppliers, and sometimes with competitors.

In the Tesla as mobile device ecosystem, it is just as likely that Tesla would build a charging network, as it is that Tesla would offer to share technology with competitors who might in turn contribute back to the ecosystem.

So only time will tell if technology brand behaviors will drive success in a category steeped in 20th century business behaviors.  But if Elon Musk succeeds, he will have also succeeded in moving the automotive category out of the Industrial Revolution and advancing it into the digital age.