Monday, November 27, 2006

What are you really driving?

Earlier this year I bought a Mercedes. It was a 3 or 4 hour decision. The possibility was placed in front of me 6 days earlier, but I had no intention or reason to buy another car, any car. Then due to my daughter’s car being broken into, all of a sudden the need for another car came up, and the seed that was previously planted bloomed so to speak.

We did some car swapping and I got the Mercedes and it has been an interesting study in perceptions. All of this is my own lead-in to a story that was released today concerning marketing automobiles. Read it for yourself:

DETROIT — It's an article of faith among enthusiasts that "product" — irresistibly appealing vehicles — is all that matters when it comes to attracting customers.

Perhaps no one believes this philosophy more ardently than Cadillac General Manager Jim Taylor, who has a background in engineering and product development.

Since the debacle of GM's failed era that emphasized marketing, when the company was led by experts from packaged consumer goods giant Procter & Gamble, product has been the undisputed king at General Motors.

But the company has learned, to the never-ending chagrin of the product guys, that marketing matters, too.

"A big part of the luxury game is image and fashion," said Taylor. "You are not buying transportation."

Consider the CTS entry luxury sedan. The car's first-year sales — when hot new models rack up their highest numbers — reached 38,000, only 2,000 cars short of the company's fondest hopes. But in subsequent years sales continued to rise, topping 61,000 in 2005. Four years after its launch, the CTS was selling 50 percent above GM's most optimistic forecast, rather than trailing off, as is the typical pattern.

Cadillac has been able to keep increasing CTS sales, mostly on the strength of marketing, as the brand shifted its image from the sleepy, stodgy, has-been choice of the Geritol generation to a more vigorous, active and, ultimately, cool image.

That can be seen by the company's measurement of consumers' opinions of the nameplate. While that image shot up with the arrival of the CTS, it began sagging back toward its original levels a year later. But the introduction of the hotrod CTS-V and the launch of that car's racing program corresponded with a rapid increase in that opinion during 2004 and 2005.

The CTS and the Escalade are also helping pull down the average age of Cadillac buyers. That stood in the low 70s five years ago, but has since dropped about five points into the upper 60s. With STS and DTS still popular in Del Boca Vista, the CTS and Escalade enjoy popularity with the prized younger customers.

Trouble with those customers is, there aren't really that many of them out there, said Taylor.

"Everybody has that target guy in mind, who is 42 and good-looking and an investment banker, but there just aren't that many of them," he said.

Instead, empty nesters in their 50s, relieved of the cost of college tuition, are the segment who actually buys most luxury cars.

Cadillac's SRX crossover SUV has lagged in sales, to Taylor's frustration. But he said he hopes that an ongoing campaign to introduce the SRX to consumers will begin to pay off. Currently the popularity of the Lexus RX 330 and Cadillac's own Escalade put the SRX in an unenviable position.

"Who knows how many SRXs we would sell if we weren't selling 50,000 Escalades a year," Taylor said.

To keep pressing Cadillac's marketing momentum, the division dropped the Led Zeppelin-backed "Break Through" ad campaign it had used since 2001 and switched to hip new ad agency Modernista! "The Led Zeppelin commercials were getting too confining," explained Cadillac spokesman Kevin Smith. It was time, Cadillac management decided, to move on.

Today's commercials feature a variety of music, rather than sticking with a signature dinosaur rock sound, including on the "Evolution" ad, music of a younger generation with Iggy Pop singing a Teddybears song titled "Punkrocker."

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