“Reinventing the Auto Market”
Leslie Butterfield, CBE, Interbrand’s group chief strategy officer and author of 'The Story of the Mercedes-Benz Brand'
"We’ve never seen a period of such profound change for brands as in the last 18 months.
The global automotive market, in particular, has experienced more turbulence than most: the near bankruptcy of Chrysler and GM; the ‘fire sales’ of second-string brands; the pleas for scrappage allowances; the images of airfields lined with unsold and unwanted stock.
As reported in our 2009 Best Global Brands report last month, the sector had just completed its worst year since 1992.
But as we look ahead to 2010 and beyond, what should we expect for car brands—more of the same or a different future?
Our view is the latter.
The industry is painfully, but necessarily, reinventing itself.
The last 18 months have been like a cleansing fire.
The deadwood has been cleared out and the ground is fertile for new growth.
Fewer brands perhaps, but better ones.
Below are some lessons we can learn from those already leading the way.
Lesson 1: Preserve the core of your brand, and grow out from it
Denial is not a smart strategy.
Brands that try to change in ways not true to themselves tend to fail.
The trick is to identify what is at the heart of your offer, set that in stone and then evolve from there.
Look at BMW, which has intelligently evolved its range – largely to follow market and consumer trends with cars like X3 and 1 Series – but has still retained a clear house style, and a high degree of brand integrity.
Lesson 2: Commit to renewal, even when it’s tough
Before 2008, GM was incapable of renewal and it bankrupted the company.
Now the market has forced GM to take the actions it should have taken years ago.
What we are witnessing is a moment of creative destruction.
Brands like Saturn that never really fitted in with GM’s portfolio are being dropped.
Brands in GM’s heartland, like Cadillac and Chevrolet, are being re-energised.
Whether the strategy will work remains to be seen, but the lesson is the right one: commit to renewal, see it through, even when the going gets tough.
Lesson 3: Embrace digital…
Digital is reshaping how we find out about things, share and store information and communicate with each other.
The old models of branding are breaking down.
You need to think digital if you’re going to stay ahead in the new world.
Brands like Porsche are engaging with consumers on the web and on mobiles.
Mercedes-Benz recently announced that it is now allocating 50% of its marketing budget to digital media.
Change, indeed—from the old model of TV and print as the dominant advertising vehicles.
Lesson 4: ...but stay ‘real’ too
While digital is important, the power of live experiences are equally so.
Cars are multidimensional, multisensory objects.
Successful car brands will need to find ways to bring their products closer to people.
Out of town steel and glass ‘palaces’ may not be the way of the future.
Touch and feel brand experience centres (like Mercedes’ Brooklands site for example) might prove to be a better model for really powerful customer engagement.
Lesson 5: Act sustainably
As an industry, automotive has been slow to adapt in this area.
Consumers are going to be looking harder than ever at car companies over the next 10 years.
Consumers will still care about performance, quality and fuel consumption, but the new tiebreakers will be sustainability initiatives and enhancements.
Toyota has stolen a march on all others here, but it’s not too late for smart brands to carve out their own niches, or (better still) come at the same issue from a different perspective.
So the future is not all gloom and doom.
The market ‘reset’ that’s taking place right now will sort the nimble and smart from the slow and tired – and that may be no bad thing."