Markethaus Musings

I wrote yesterday about the decline of what we used to call the "Big Three (3)." I often read in news articles that the Big 3 need to "improve their marketing."

Actually, it's the exact opposite. There is nothing really wrong with Big 3 advertising and promotions. In fact, I'd argue it is probably the best there is. Domestic producst have very high awareness, typically. They have more dealers and have been around longer so they are part of your community.

Further, domestics simply spend more on advertising. Why? Because they can and because for years, the product was inferior (it's probably on par with the leading imports now) so advertising, price reductions and cash back is all they had to promote products that had quality issues.

In the car business...it's about the product. (I'm going to duck now, because there are a lot of people out there who believe that it's about the marketing/advertising). And if your product isn't very good, you have your hands full...sure...you can work magic around the margins...but negative consumer feedback will kill the best ad campaign in a matter of weeks and months.

The car companies and their dealers (primarily the Big 3) spend about $40-$50 billion (yes, that's with a B) on marketing and advertising. 2/3 of that is spent on cash back, low rate financing and dealer /salesperson incentives. 1/3 of that is spent on TV, newspaper, radio, magazine ads to either tell you why it's a great car or why now is a great time to buy.

Some key reasons why product is king in automotive.

1. Cars are not kleenex, chiclets, canned chipped beef or even air freshener. A brighter, more noticeable box or endcap at the grocery store checkout line will not impact the decision making process significantly because the decision making process is, on average, 6 months long (based on consumer research I conducted/witnessed over the years as an advertising researcher and product dev. consultant)
2. Your neighbors and friends don't tell you how happy/unhappy they are with their breath mints at cocktail parties. They will, however, talk until they are hoarse about how much they love or hate their XYZ 4x4 because of the quality problems and the poor service and that the defroster doesn't work and they will NEVER buy one again.
3. You don't take dog food or tuna fish in for service 2-3 times a year. How you get treated, what you get charged and how the car is returned has a big impact on your view of that dealer and the manufacturer the dealer represents. I know people who currently won't buy another xyz because of the poor service received. Don't you?

More later on automotive advertising and marketing...