Op5: If the product stops selling, solve the problem rather than simply trotting out the usual fix

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hrysler Group last fall introduced a total makeover of its signature minivans-only to see minivan sales through January fall back 6%. Cheap models and the high-end line sold well, but sales of Chrysler's bread-and-butter Dodge line of minivans crashed nearly 30%. What to do?

Chrysler, which had pushed prices up to pay for the costly redesign, didn't have the right product for the lucrative middle market. Amid its various problems, DaimlerChrysler's ailing Chrysler Group had missed the mark.

"We were doing great at the high and low end of the segment, but not in the middle of the market," or minivans costing $26,000 to $27,000, said Ralph Sarotte, general manager-minivan operations.

Part of the problem, consultants said, was that Chrysler offered huge rebates last year to clear away old models. That attracted value-conscious buyers who might otherwise have waited for the new model.

In mid-January, Chrysler came up with a fix: It would start selling a new midline version-EX-of the Dodge Grand Caravan and Chrysler Town & Country to attract buyers seeking a value price for a well-equipped van.

"We grabbed a couple of things (features) from the premium and high-end models and we reduced the price," said Mr. Sarotte. The below-$27,000 EX went on sale in mid-March.

Just as important is what Chrysler left out: The value model sells for a no-negotiation price and offers no incentives. Rather than slapping on another rebate, Chrysler decided to sell value.

The EX minivans "are more value-priced with good content" and have a "one-price, no-haggle price with no incentives," said George Murphy, senior VP-global brand marketing at Chrysler.

Initial plans were to only publicize the EX minivans on the Internet.

Mr. Sarotte said Chrysler notified automotive sites, including Edmunds.com and kbb.com, to update Chrysler's model offerings and prices. But print ads by Omnicom Group's PentaMark Worldwide, Troy, Mich., arrived a month ago and will run through the model year.

While Mr. Sarotte cautions it's premature to declare victory, sales have already nearly reached 7,000 units, and dealers have ordered more than 25,000 EX minivans.

So there are signs Chrysler has fixed the glitch in its minivan launch by thinking beyond the simplest remedy-more rebates-and by recognizing that what its customers really wanted was a well-equipped value.

"This is a path away from incentives and building more value into the product. It's more commonly called repackaging," said Jim Sanfilippo, exec VP of consultancy AMCI. "The EX is a step in the right direction away from rebates. I don't think this will be the last vehicle Chrysler does with this, and if anyone is watching and wants to get to the same place (away from rebates), you'll see more of this."

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