Chrysler's staff discounts: An unwise quick fix

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Chrysler Group plans to clear its crowded lots for the new-model year by reviving its employee discount incentive program in July. The discounts are successful at driving sales, but are widely criticized as short-term solutions that weaken brands. In an Advertising Age online poll, 60% of voters said Chrysler should shift its focus to long-term branding and ditch this quick fix.

Scott Hrdlicka, director of marketing at TriTech Corporation of America, said the incentives devalue the product in the eyes of consumers. "Repetition of such programs only communicates to consumers that their automobiles are not worth the standard asking price," Mr. Hrdlicka said. Also, the program can alienate existing customers, especially those who have already paid full price for the product.

When companies use gimmicks to move products frequently, consumers learn to wait for them, hurting the company's image and profits in the long run. "They are teaching the consumer to respond to the gimmick, not the inherent value of the product or the brand," said Chris Stone, CEO, The Stone Agency. "Give the people a product that they are willing to buy at a price they are willing to pay without gimmicks to artificially create demand," he said.

But some voters said while branding and long-term goals are important, the Chrysler incentives are a good way to accomplish short-term reality- clearing the lots. And the real effect on the brand value may be negligible. "People have short memories. Chrysler can start brand building after they empty their lots," said Harold Walters, associate media director, Cooper DDB.
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