With the Aug. 15 debut of a redesigned Legacy line of compacts, Subaru will attempt to rebuild on a foundation that distinguishes its models from competitors. The new ad theme line sums up the focus: "The beauty of all-wheel drive."
The strategy attempts to capitalize on the growing popularity of sport-utility vehicles. Subaru models-especially its station wagons-will be positioned as offering the enhanced safety and versatility of sport utilities, but at more attractive prices.
"Trying to become a mainstream player, we ended up having to market on price and rebates instead of on our product differences," said George Muller, who became president-chief operating officer a year ago and immediately began a broad reassessment of Subaru's direction. "In the past, we didn't do a good enough job of translating for consumers the benefits of all-wheel drive."
The strategy is on target, said Jim Wangers, senior managing partner of Warren, Mich.-based Automotive Marketing Consultants. "Subaru has an opportunity to gain a real advantage by educating the American public on the difference between all-wheel drive and four-wheel drive," he said.
The new campaign addresses the difference, describing Subaru's all-wheel drive as a full-time system that delivers power to all four wheels under normal driving conditions. If there is a loss of traction, power is redirected to the wheels with the best grip.
Four-wheel drive, associated with trucks, is usually a part-time system that has to be engaged manually for slippery conditions.
All-wheel drive accounted for about 55% of the company's sales of 104,179 units last year. The company has set a target of 65% to 70% all-wheel drive, said Mary Treisbach, director-marketing.
Consistent with the new focus, advertising will carry the starting prices of all-wheel drive models rather than touting the lower prices of front-wheel drive models. The Legacy model with all-wheel drive carries a base price of $15,999, while a new Impreza coupe coming this fall with that feature will be priced starting at $14,195.
Subaru's 1993 sales represented a 41.8% falloff from a high water mark of 179,100 units in 1986. Two agencies crashed on Subaru's road to near ruin.
Levine, Huntley, Vick & Beaver, New York, helped build Subaru's original image as a marketer of inexpensive, durable all-wheel drive cars. That reputation brought a loyal following, especially in the Northeast and Colorado.
But in the late 1980s, Subaru decided to go upscale and mainstream.
"Subaru got caught up in the spirit of the roaring '80s," said John Rettie, analyst with J.D. Power & As-sociates, an Agoura Hills, Calif., marketing consultancy. "The Japanese built cars to show off their technical expertise. They thought they could do no wrong."
By 1991, a new management team brought in by Japanese parent Fuji Heavy Industries hired Wieden & Kennedy, the Portland, Ore., agency known for putting Nike on the map.
Wieden's "What to drive" campaign ridiculed conspicuous consumption in car-buying just as the company brought out the $25,000 SVX sports car. But what really incited the wrath of dealers was the 1993 introduction of the Impreza line of subcompacts, including a commercial with a grunge-dressed young man who compared the car with punk rock.
"I hated the campaign," said Bill DiCarlo, a Norwood, Mass., Subaru dealer and chairman of its national dealer advisory board.
"On a limited media budget, we should have had ads that cut across demographics," he said, adding that the problem was compounded by the decision to lavish $2.5 million on a Super Bowl introduction.
The Impreza flopped. Enter Mr. Muller, promoted from exec VP in a management restructuring. Exit Wieden, replaced by Temerlin McClain, Dallas, known for doing retail work for clients like J.C. Penney Co.
Ms. Treisbach gives the agency high marks for working closely with dealers and for "bringing more of an integrated look to our marketing."
The Legacy campaign takes in seven 30-second TV spots as well as print and outdoor components.
Temerlin also developed dealer marketing materials, helped Subaru plan its Legacy debut at the New York Auto Show in April, and provided creative help on a direct mail campaign by Maritz Marketing, St. Louis.
"Our ad messages have to be designed to build traffic for dealerships," said Dennis McClain, agency president. He said that attitude led to focusing on the value generated from the safety benefits of all-wheel drive.
Fuji doesn't break out Subaru of America's earnings, but the U.S. subsidiary has been a money loser for several years.
Mr. Muller said his goal is to break even the second half of this year, and to turn a profit in 1995.
Fuji has made a long-term commitment to develop products that will fit Subaru's marketing direction.
The first, the Outback, is a rugged version of the Legacy wagon that will be introduced late this year.
Future products will represent even more of a hybrid between a traditional wagon and sport-utility, Mr. Muller said.
"We are recommitted to being a niche marketer," he said. "We can't just position ourselves head-to-head with Toyota and Honda in performance and value. They have more ammunition."