So the company is moving upscale starting with the
third-generation Mazda6 mid-sized sedan introduced in the U.S.
market in January. At the car's launch in Japan, Mazda's global
research & development chief used the term "Japan premium" for
its brand positioning, comparing it with German luxury marques.
I don't foresee many car buyers saying, "Forget about BMW or
Mercedes, let's buy a Mazda."
What many marketers like Mazda forget is that marketing is a
competitive sport. What you can or cannot do depends primarily on
your competition, not on your competence. Sure, Mazda can make
"premium" vehicles, but how in the world is the company going to
communicate that position in the face of overwhelming
Mazda is the 17th largest automobile brand in the American
market, behind such brands as Ford, Chevrolet, Toyota, Nissan, Kia,
Dodge, Jeep, Volkswagen, GMC, Subaru, Chrysler, Ram, Mercedes and
BMW. Last year, Mazda sold 277,046 vehicles in America.
In the last dozen years, Mazda has never sold more than 295,737
vehicles a year. Mazda's sales goal for 2016? "At least 400,000
units," said CEO Yamanouchi.
Move over Ron Johnson, another CEO has outdone you in
Mercedes-Benz moves downscale
You know it's a big deal for Mercedes when they run a Super Bowl
spot in February to introduce a new model that won't be available
"Here is the opportunity with one car to redefine the perception
of the Mercedes-Benz brand," said Steve Cannon, CEO of
Mercedes-Benz USA. "People always put us up into this stratosphere.
We are associated with the S class and heads of state."
"We wanted to shock people," he said. The price of the CLA, a
sedan with coupe styling: $29,900. And that's what the Super Bowl
commercial proclaimed in big, bold numbers.
Will a $30,000 Mercedes-Benz sell? Sure.
Will a $1,000 Rolex sell? Sure.
You can always sell a high-end product if you cut the price. But
is this a good strategy in the long term?
Not if you are more interested in building a brand than in
moving the merchandise. Long-term, nothing works better than
building a strong brand that stands for something in the minds of
And a high price (along with the perception of high quality) is
a particularly powerful position to own in consumers' minds. Grey
Goose in vodka. Louis Vuitton in fashion. Four Seasons in
What does Mercedes-Benz want to stand for? A high price is
certainly part of the reason consumers buy Mercedes vehicles.
Few companies seem to be happy with their positions in the
marketplace. In general, most companies want to "expand." Either up
the price ladder or down the price ladder.
Hyundai moves upscale
In spite of its weak name, Hyundai has done exceptionally well
at the low end of the automobile category. In the year 2000,
Hyundai was the 18nd best-selling automobile brand in America, with
sales of 244,391 vehicles. Last year, Hyundai was sixth with sales
of 703,007 vehicles.
But Hyundai is thinking big. In 2008, the company introduced the
Hyundai Genesis in the American market designed to compete with the
BMW 5 Series and Mercedes E-Class. Starting prices: $38,000.
In 2010, the company introduced the Hyundai Equus designed to
compete with the BMW 7 Series and Mercedes S-Class. Starting
How well have these two new additions to the Hyundai line done?
Not very well, in my opinion. Last year Hyundai sold 33,973 Genesis
models in the American market and 3,942 Equus models. Together, the
two high-end models account for only 5.4 percent of Hyundai's U.S.
But there's another way of looking at the situation. Compare
Hyundai with Kia, its Korean cousin and a third owned by Hyundai.
Kia also concentrates on the low end of the market, but the brand
is doing better than Hyundai. Since 2008 (the year Hyundai
introduced Genesis), Kia sales in the American market have
increased 104 percent. Hyundai's sales in the same period have
increased only 75 percent.
In my opinion, Kia has a much better strategy than Hyundai and
is likely to overtake its Korean cousin in the years ahead. Last
year, Kia sold 557,599 vehicles in the American market, just 20.7
percent behind Hyundai. And Kia's sales were up 14.9 percent from
the previous year, compared with an increase of just 8.9 percent
Coping with change
The world is constantly changing and what are most companies
doing about it? They're stretching their existing brands to cope
with the changes.
Most of the new brands introduced in the last few decades have
been introduced by entrepreneurs, not by established companies.
Brands like Twitter, Facebook, Netflix, Pinterest, Skype, Dropbox,
Chobani, Activia, Axe and many others. For some reason, an
established company would rather wait on the sidelines until an
entrepreneur develops a good idea and then swoop in and buy the
A better approach is to keep your existing brand focused and
then hammer the reason it was successful in the first place.
Then consider the possibility of launching a second brand to
exploit changes in the marketplace.