Industry pros who create and sustain automotive brands rate General Motors Corp.'s Saturn unit as the best example of brand management in the business, followed by luxury automakers BMW of North America, Mercedes-Benz of North America and Toyota Motor Sales USA's Lexus. Ironically, GM came in last.
Saturn won the title in a survey conducted by A.T. Kearney Inc. of 100 automotive brand managers and advertising and marketing professionals. Automotive News and Advertising Age commissioned the survey.
MUST WORK HARDER
Saturn may hold the winner's gold today, but it may have to work harder to keep it, the survey suggests.
The race to build a brand image is so heated that automakers are spending more in 10 out of 11 advertising and promotional categories surveyed. Brand management is driving up spending for TV and Internet exposure in particular. Only radio budgets are not increasing.
Creating a brand name that means something to consumers does not come cheaply.
It costs an average $159.5 million to introduce a mass-market vehicle nameplate in North America, according to the industry experts. Sustaining a national nameplate costs $74 million annually, according to those executives surveyed.
"This is high-stakes poker, and the stakes are getting higher," says Jay Houghton, marketing manager at Kearney. "You have to have money to be a player."
Those in the trenches trying to make a vehicle stand out against the competition would like to rein in costly brand proliferation.
Nearly four out of five of those surveyed said General Motors Corp. should eliminate some vehicle nameplates. Chrysler Corp. and Ford Motor Co. also need to do some pruning, according to one out of five.
The survey makes it clear that the tenets of brand management now pervade not only automotive marketing and advertising but also dealer relations and product development.
MORE TO COME
There is a lot more to come as some automakers continue to follow in the footsteps of renowned brand marketer Procter & Gamble Co.
Automakers have to succeed at brand management to succeed in the North American automotive industry, some experts say. How well a company defines its brands will play an even greater role in the future.
Indeed, 53% of the pros surveyed say brand management will influence product development considerably in the future, compared with 27% who think the impact is that strong today.
Some of that influence can already be seen.
Ford, which is promulgating brand management throughout its global operations, hired J. Mays as VP-design in September 1997, citing his experience in translating brand image into vehicle design.
"Brand management is now a state of mind for the industry," Mr. Houghton says. Previously, auto companies tried to attract consumers by relying on technology -- increasing horsepower or being the first to add airbags. Now, brand image is taking over that job, he says.
"The industry is moving from being technology-driven to brand-driven. It is about 30% [of the way] through the transition," he says.
Mr. Houghton defines brand management as the formal structure used to create a powerful brand. What is meant by a brand may vary from company to company, he adds.
There are limits to how far the experts think brand management can be taken.
The surveyed professionals do not expect brand management to become so pervasive that large retail chains will develop their own private-label cars and trucks.
That concept might work for cereal and sweaters but not sedans and sport-utility vehicles, according to the experts.
Eighty-eight percent of those surveyed do not believe large retail chains, such as Republic Industries' AutoNation USA, will develop private-label vehicles.
SOME SEE GENERIC VEHICLES
At the same time, 12% of the respondents anticipate the development of generic vehicles.
Those who view cars and trucks as merely commodities are more willing to envision private-label vehicles purchased from a trusted retailer, says Mr. Houghton. But people passionate about the product are not likely to foresee generic-brand vehicles.
Brand management's influence also is limited in curtailing the industry's runaway dependence on sales incentives, such as rebates. More than half of those surveyed have no hope that brand management will succeed so well that incentives will be unnecessary.
That said, brand management will continue to make a huge difference in the daily business of running an auto company, the experts say. That is because creating a brand image involves so many operations -- and every one of them has to sing from the same songbook.
"The essence of a powerful brand is to have one voice," says Mr. Houghton.
Consistency in advertising, appearance and customer experience at dealerships is critical to building a powerful brand identify, according to the experts.
Indeed, creating a consistent appearance and customer experience at dealerships is the most important tool in building a strong brand image, those surveyed said. Eighty-five percent described the dealership's role as very or extremely important.
The retailer was deemed more important in crafting brand identity than similarity of advertising, vehicle style, a family appearance for similarly branded vehicles, and product-oriented and lifestyle-oriented advertising.
That ranking may reflect Saturn's success as an integrated marketer. The small-car retailer has made the Saturn buying experience a powerful brand-building tool.
The lesson to be learned from Saturn and other masters of branding is that mass marketers must act like niche players, says Mr. Houghton. Successful niche brands convey a single, consistent message that is easily understood by consumers.
Those making barely passable grades in brand management have either lost their way as niche marketers or are large mass marketers still struggling to refine myriad divisional and nameplate images.
For example, the Saab brand stumbled when the Saab 9000 cast a mainstream image on an automaker long regarded and prized as eccentric.
GM, ranked last in the survey, has the most work to do because of its size and model lineup. But GM has the most to gain from successful brand management, says Mr. Houghton.
MAKE A DIFFERENCE
The hard work of brand management will make a difference to consumers, according to those polled. Eighty-two percent say brand management is important to consumers as they ponder making a choice in the six months before a vehicle purchase.
Though complex to implement, brand management is simple in its conception.
"It comes down to vision," says Mr. Houghton. "Brand management asks who am I and what do I want to be?"