The Auto 'Boom'

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It's better to burn out than it is to rust.

The generation that adopted Neil Young's attitudinal anthem has always had a profound effect on auto marketing. As the first baby boomers turn 50, they show few signs of burnout or rust.

Indeed, with baby boomers now in their prime years for making vehicle purchases, a seismic shift in the automotive market is inevitable. It won't be the first time this generation has reshaped the landscape.

In the 1960s, the newly created Mustang greeted their arrival at driving age. Boomers made a cultural icon out of the homely Volkswagen Beetle, then they validated the import phenomenon by taking a chance on brands like Toyota and Honda.

In recent years, they turned minivans and sport-utility vehicles into the auto market's trendiest segments.

A total of 76 million Americans were born between 1946 and 1964, the period usually used to define the post-World War II baby boom. Because of the sheer numbers that make up the demographic "pig in a python," the generational birthday party is a major media event.

REDEFINING THE MATURE MARKET

More importantly for automakers, this huge group will redefine the mature market, say trend watchers. Marketers who design, advertise and sell products the same way they did to earlier generations of fiftysomething consumers will flop.

Figuring out how to satisfy aging boomers represents an enormous business opportunity for all auto marketers, and a steep challenge for those brands that don't already have a solid base of customers from that generation.

By 2010, boomers will account for 57.5% of all the new vehicles sold in the U.S., compared with 49.5% in 1995, according to Paul Ballew, chief economist at J.D. Power & Associates.

"Every marketer worth his salt has to focus on this age group and give up the obsession with the youth market," says Cheryl Russell, author of "The Master Trend: How the Baby Boom Is Remaking America."

While boomers are a heterogeneous mix, auto marketers are most interested in the college-educated, affluent slice. In 1995, all households in the top 25% of income accounted for 60% of vehicle purchases, according to Mr. Ballew.

Moreover, boomers are now entering their prime years for earning income and buying new vehicles. Consumers in the 44-to-55 age group spend the most per household on new cars and trucks-44% above the national average, according to the U.S. Bureau of Labor Statistics' 1993 Consumer Expenditure Survey. Second is the 55-to-64 age group, followed by the 35-to-44-year-old group.

One reason 44-to-55 year-olds are the biggest spenders on vehicles is because this is the age group with the highest median household income-$46,207-according to the Census Bureau's 1994 Current Population Survey.

DIFFERENT TYPE OF CONSUMER

Boomers' high education levels and their experience growing up in a time of unprecedented prosperity and optimism create a different kind of automotive consumer than previous generations, says Jay Houghton, senior analyst with Automotive Marketing Consultants.

"People who are 70 today grew up knowing, from a depression and a war, that the world was cruel and hostile. When they matured, they wanted a car that would be both a reward for a lifetime of hard work-and protection from the world. They didn't want to feel every pebble going down the road," Mr. Houghton says.

"Boomers have been rewarding themselves their entire life, and their relationship to the outside world is completely different," Mr. Houghton says. While they are similar to an earlier generation in wanting comfort and convenience, they differ because they want to be integrated with their machines and their environments, he says.

NO SLOWING THEM DOWN

"Boomers pursue active lifestyles," says Colin Lippincott. "In aggregate, they are just doing more things" than other age groups. Mr. Lippincott is product manager of R.L. Polk & Co.'s "Lifestyle Selector," a database derived from 35 million people who filled out product-registration questionnaires for 130 consumer goods marketers. Boomers are more likely than their predecessor or successor generation to play golf, participate in gourmet cooking and See BOOMERS on Page S-20

The generation that use a home computer, according to Polk's figures.

Another distinguishing characteristic is the economic power of highly educated boomer women. They represent the first generation in which many women are in position to purchase their own vehicles independently.

WOMEN SET THE TREND

Baby-boomer women have been a major driving force in the popularity of minivans and sport-utility vehicles, which have largely replaced the station wagons that represented family transportation when they were growing up. As their children move from home, it will mean more energy and financial reserves for women to spend on satisfying their own sense of style.

Auto marketers need to take into account the influence of women, while strong, will continue to grow, says Dave Bostwick, director of corporate marketing research for Chrysler Corp.

"There's a difference between men and women in terms of what size vehicle they are comfortable with," Mr. Bostwick says. "Women don't want to sit in the middle of a barn, but they will be comfortable with a larger vehicle if you create it in a way that feels more intimate."

In Ms. Russell's view, the single defining characteristic of boomers is their individualism. That translates into buying behavior that is not necessarily loyal to brands-and can sometimes be self-indulgent. Individualistic boomers are open not only to new brands, but to new ways of selling cars, like one-price dealerships or using new technology such as on-line services and interactive kiosks.

David Krysiek, director of marketing at Saab Cars USA, cites the beer industry as an example of the importance of individualism.

"We went from mass products like Schlitz in the 1960s and 1970s to status products like Lowenbrau and Michelob in the 1980s. Now, it's micro-brews that are in demand. It's all about fitting individual taste," says Mr. Krysiek, whose Saab brand is appealing to that individualism with its quirky, impressionistic "Find your own road" campaign developed by Angotti, Thomas, Hedge, New York.

Leaving behind their 40s-a stage of life often marked by unrelenting responsibilities for young children and aged parents-many empty-nester boomers will try to reclaim a sense of adventure and fun, Ms. Russell says. She foresees them creating a life stage called "midyouth" that will obliterate any traditional ideas about the mature market.

Satisfying the pent-up demand should translate into "putting some fun back in the driveway," says David Kalmus, VP-business development for auto-market research consultancy Dohring Co.

ROADSTERS REDUX

"The search for more personal transportation will mean a surge for roadster sports cars," predicts Mr. Kalmus. The BMW Z3, which went on sale in February, will be followed this fall by the Porsche Boxster and in early '97 by the Plymouth Prowler and the Mercedes-Benz SLK.

BMW introduced the Z3 with a marketing effort promoting it as the new car of boomer cultural icon James Bond in the movie "Golden Eye." The campaign included commercials from Fallon McElligott, Minneapolis, that laced film scenes into the spots. The car was a sellout even before it reached dealers in February.

Forty-to-55-year olds who will regard the Z3 as a "weekend reward" make up one of the main target groups for the car, says Jim McDowell, VP-marketing for BMW of North America. Those buyers "want the roadster to have the best of everything," says Mr. McDowell, who adds that BMW will later bring out a number of new, undisclosed options aimed at that group.

The hot-rod throwback Prowler is another car that will have a great emotional pull for baby boomers, predicts Ms. Russell.

"With its retro look and an appeal that reminds people of their youth, the Prowler represents one exciting direction for the auto industry," Ms. Russell says.

Tom Gale, VP-product design and international operations for Chrysler Corp., says the Prowler won't compete as much with other automotive products as it will with other emotionally driven purchases such as a boat or a second home.

After achieving success, "You tend to go back to the things you aspired to earlier and had no way of doing or owning," says Mr. Gale. In that way, the Prowler will appeal to boomers who always wanted a hot rod, but didn't have the ability to build one or the money to commission having one built, according to Mr. Gale.

SETTING THE HOT SEGMENTS

Mr. Ballew says the aging of boomers will have a big affect on which segments thrive in the next several years. The shrinking of the 25-to-34-year-old group will almost certainly mean a decline in the compact and lower-priced midsize cars segments, he says.

One of the key questions for product planners is whether boomers will continue to buy trucks. Mr. Ballew sees a major battle coming between SUVs and entry-level luxury cars.

"There's a substantial downward risk for sport-utilities as a lot of their current owners move past 50," says Mr. Ballew. That group won't support traditional large luxury cars, but will be attracted to near-luxury cars "with some sex appeal" along with comfort, convenience, and better ride and handling than sport-utility vehicles, Mr. Ballew says.

A boomer preference for certain segments always has played a big role in whether domestic or import brands thrived. Mr. Ballew says domestic brands will remain strong if boomers stay with minivans and sport-utes, while upscale import brands such as Lexus and Infiniti are well-positioned to take advantage of a shift back to cars.

IMPORTS GREW WITH BOOMERS

In the 1970s and 1980s, import models like the Toyota Corolla and Honda Accord first won over boomers who were looking for reliable, economical transportation.

"You won't get boomers' attention unless you have a product that fits their definition of quality, reliability and durability. That's the price of entry," says Irv Miller, corporate advertising and merchandising manager for Toyota Motor Sales USA.

Along with quality, "you need to develop fresh new products that capture the imagination of those buyers," Mr. Miller says.

Some brands that did well with boomers' parents face the hard task of establishing credibility with boomers.

MAJOR PUSH FOR CATERA

For instance, General Motors Corp.'s Cadillac and agency D'Arcy Masius Benton & Bowles, Bloomfield Hills, Mich., are putting a major effort into getting boomers to consider the Catera, a German-built sports sedan debuting this fall. The project is so important that DMB&B has enlisted the help of eight of its offices to contribute creative concepts.

"The social cues that went with driving a car in the '60s and '70s are not as relevant today," says Bill Hackett, exec VP-director of planning and research for BBDO Worldwide, Southfield, Mich., agency for Chrysler Corp.'s Dodge.

Mr. Hackett says boomers are suspicious of any advertising that sounds like hype.

MUST IMPLY QUALITY

"When you use the word `Quality,' they think that in all probability you don't have it," Mr. Hackett says. "You have to imply quality by attention to detail."

Some auto marketers are borrowing nostalgic references to try to sharpen their appeal to boomers. Mercedes-Benz of North America used the haunting lyrics of counterculture icon Janis Joplin's-"Oh Lord, won't you buy me a Mercedes-Benz?"-to evoke positive feelings from boomers in a commercial from Lowe & Partners/SMS, New York.

Ford Motor Co.'s Ford division and agency J. Walter Thompson USA, Detroit, developed a media strategy aimed at attracting more boomers to the redesigned 1996 Taurus. The media plan included exclusive auto sponsorship of ABC's broadcast of "The Beatles Anthology," and Ford was the exclusive advertiser in a special Life "Beatles Collectors Issue."

Even as boomers look for adventure and fun, aging will demand some concessions.

"You don't bend as well, and most people are a little bigger at 50 than they were at 22," says Mr. Houghton. A lessening of visual acuity may imply a need for larger instrument readings, Mr. Houghton says.

NOT ACTING THEIR AGE

Nevertheless, Mr. Houghton and other industry observers say the biggest mistake an auto marketer could make is to write off the generation as being too old for sporty, stylish products.

"Other generations adapted to what their predecessors were like," Mr. Kalmus says. "But baby boomers never adapted. Their needs and desires are still the same."

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