Mr. Cannon, 46, worked at DaimlerChrysler and Mercedes-Benz for nearly a decade. In 2002, he became a principal at Richards Group in Dallas. Now back at Mercedes-Benz, Mr. Cannon is preparing to relaunch the M-Class SUV, develop campaigns for diesels and prepare for the 2009 debut of a smaller SUV, the GLK. He discussed Mercedes-Benz marketing strategies with Automotive News Staff Reporter Diana T. Kurylko.
Auto News: What does the Mercedes brand stand for in the U.S.? How will you apply that to marketing programs?
Stephen Cannon: Mercedes-Benz has an unparalleled level of passion and aspiration in the United States. I've had a chance to sit on the other side of the glass of focus groups -- three product clinics where we showed next-generation stuff.
In one group, female buyers talked about their M-Class with real passion and pride. I get the feeling they park their car, lock the door and look back. There is a passion for the brand that I need to bottle and make it relevant to a larger number of customers.
Auto News: Is this any different from what other luxury-car owners feel?
Mr. Cannon: Absolutely. I have listened to other competitive owners. They say their car is reliable and bulletproof -- in the same kind of terms they talk about their washing machine that doesn't break down. BMW has a strong emotional connection with its buyers, and I won't discount that.
Auto News: Will new ads reflect this passion?
Mr. Cannon: The wheels are turning. There is a thread of continuity with our S-Class, C-Class and new M-Class spots that we've started airing.
Auto News: Explain the "Why?" campaign for the C-Class. You're on network TV, which you haven't done for a long time.
Mr. Cannon: We have to establish the C-Class, our gateway to the brand, as a true Mercedes-Benz. This isn't the cheap or baby Mercedes-Benz. We are going out of our way to demonstrate this. Many people are referring to the C-Class as a small S-Class. It has every bit of the DNA that Mercedes-Benz is all about. You have the quality and you have the testing. Seven years have gone into this car. We wanted to bring that to life.
I was at a dealer meeting in Las Vegas. I can't tell you how many dealers came up to me and said that the moment in the TV spot where the four beefy guys sit on the door sills to show the car's sturdiness is something they demonstrate in their dealerships.
To me, the art of really terrific communication is trying to boil down something complex to a sound bite or a visual. That's a moment that communicates so much -- durability, quality and design -- in a microsecond.
Auto News: You prominently advertise the starting price of the C-Class. Why?
Mr. Cannon: In this hypercompetitive segment, it's all about price value. We have a good story with the new C-Class. We are touting that with consumers and our dealers. We see that as a real opportunity.
The more people we bring into the brand, the healthier the Mercedes-Benz ecosystem is. The C-Class is the No. 1 source of sales for the E-Class, the CLK and the SLK, and it's one of two sources for the ML. That is why our product strategy has changed, and we have the sport and the luxury face. The split is 70% sport and 30% luxury. We have a dual product strategy for the first time.
Auto News: How have you measured the effectiveness of the C-Class advertising?
Mr. Cannon: We are coming off the third-highest C-Class month ever. There are no incentives, and it's in the launch period. The other two months were in December, during the year-end event with specials and leasing.
The good news for us is that we are only midway through our launch spending. The spending increases 20% in October, and we maintain that in November and December. Dealers are seeing customers come in who are new to the brand. We expect a 60% conquest level on this vehicle.
Auto News: How will you relaunch the M-Class SUV?
Mr. Cannon: We have a four-week media push with some significant national weight to get it back on people's radar screens. The Lexus RX is long in the tooth. It's getting ready to be relaunched next year. The opportunity is good for us to push. We see volume opportunities.
Auto News: Will you put incentive money behind the M-Class?
Mr. Cannon: No. This is just a marketing push. We have a terrific price-value relationship with that vehicle right now. We think not enough people know how attractive it is. There is TV, a heavy internet component and an event component.
Auto News: Is the event portion similar to the C-Class drive?
Mr. Cannon: The C drive is a multimedia event by invitation. We were doing test drives with 15 beautiful C-classes; that's rolling advertising. It has gone to 11 markets. We have had more than 33,000 test drives. The average time spent is 1.5 to two hours.
In marketing, you are always looking for a quality interaction with consumers where you get to dictate the message on your terms. In auto shows, you are competing with every other manufacturer. On the airwaves, two or three other luxury marques may be advertising, so it's cluttered.
Consumers spent their Saturday or Sunday with us. We had an eight-minute multimedia presentation, and I saw 40 people sitting with full attention listening to the presenter. When do you ever get that quality interaction with a consumer? We pioneered this. During my first stint with the M-Class, we took our brand to the people.
Auto News: How will you convince people the M-Class is new enough?
Mr. Cannon: We have a terrific story to tell, and it makes sense to tell it in a bigger way. We have a ton of momentum now. Dealers say the right customers are coming in.
Auto News: Will your ad spending be up or down in 2008?
Mr. Cannon: It will be up, in about the 10% range. We will continue to build momentum for the C-Class. It's a terrific segment, and it helps the whole system. And the M-Class will also be pushed into the new year.
Every time we go to a clinic, we ask, "How much do you think this costs?" People elevate the price by $10,000 to $20,000. This is why it is important for us not only to elevate the brand but also to make it acceptable. That is why we go out with C drives, to present ourselves.
Auto News: How will you market the smaller SUV you have announced, the GLK, due in 2009?
Mr. Cannon: The GLK is a phenomenal product. It will come in under the M-Class, which will give us a three-vehicle truck lineup. We will have a new entry position in the truck segment.
We will launch it in January 2009, but in all of 2008 we will do our prep work. We are going to have a significant amount of microsite internet activities.
Auto News: What do you bring to this job?
Mr. Cannon: Mercedes was my first job coming out of the Army, from 1991 to late 2000. I have been in New Jersey (at Mercedes' U.S. headquarters), moved to Stuttgart [Germany] and worked on the design, development and launch of the first M-Class. I spent several years in Stuttgart and speak the language, so I can move through the halls freely talking to colleagues.
I spent time at the plant in Alabama orchestrating the start-up and the market launch. I was also on the finance side with Mercedes-Benz Credit. Most recently I have been on the agency side.
We have six agencies that we work with. So much on the marketing side is driving agencies, getting the best work, leveraging the brain trust that smart people in agencies represent. Having walked in their shoes for five years, I think I bring a perspective that adds value. I'm an insider with an outsider's perspective.