Midsize category battles some giant-size problems

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A commercial for the Saab 9-3 shows a business traveler trying to find his rental car. He presses the key fob as he walks past row upon row of black, similarly styled sedans until a light-colored 9-3 convertible catches his eye. Standing out from the crowd is exactly the challenge every carmaker faces with its product.

This test is clear for General Motors Corp. and Ford Motor Co., which recently introduced multiple vehicles in the midsize segment. The cars in question, in addition to the Saab 9-3, are GM's Pontiac G6, Buick LaCrosse and Chevrolet Malibu, and from Ford, the Ford Five Hundred and Mercury Montego.

The midsize segment accounted for 55% of U.S. car sales last year. It is "an extremely competitive segment, if not the most competitive. Because of its size, every non-luxury maker wants to be in it," says Tom Libby, senior director-industry analysis at Power Information Network, an affiliate of J.D. Power & Associates.


One way for automakers to achieve cost efficiency is by building multiple models off the same platform, the basic vehicle foundation. Sharing platforms makes financial sense.

"It costs over $1 billion for a brand new platform vs. about $400 million if you're talking about a new shell. Hand in hand is how long it takes you to bring a new vehicle to market. New takes about three to 31/2 years, compared with less than half of that for the other extreme," says Evan Hirsh, VP at Booz Allen Hamilton.

But beyond the dollars sense of sharing platforms and other content, the practice can create marketing challenges as automakers strive to create distinct brand identities.

"When product differentiation isn't there, it inhibits the brand positioning in the customer's mind," Mr. Libby says. "You cannot create a strong brand image. GM is not as guilty. Many of its models are differentiated. I think Ford is guilty with the Ford and Mercury brands. Losing Plymouth helped DaimlerChrysler."

Ford Motor made little effort to differentiate between the Five Hundred and Montego. Less is shared between GM's Pontiac G6, Saab 9-3 and Chevrolet Malibu/Malibu Maxx. For example, G6 and 9-3 share a suspension system, though they're tuned differently.

"This is the challenge for the marketing people: understanding your customer, communicating with them and minimizing the cannibalization within your other brands," says David E. Cole, chairman of the Center for Automotive Research.

Cannibalizing occurs when your competition is sibling divisions within your parent company, and one telling piece of evidence is when customers cross-shop these vehicles.

For their part, the automakers say this doesn't happen with these vehicles. "We have a lot of franchised dealers who hold both Ford and Mercury in the same showroom," says Brandon White, marketing manager for the Five Hundred. "We see cross-shoppers with Chrysler 300 and SUVs. Early data show we're attracting over 40% new customers to showrooms."

G6 Marketing Manager Gary Steilen admits: "There is some cross-shopping with the [Chevrolet] Malibu and some with the 9-3, though it's not high. The Malibu buyer is different from the G6 buyer."

The carmakers also don't see the sharing of platforms as an issue in creating distinct brand characters for individual vehicles. Nor are they concerned that multiple offerings in the same market segment dilute the vehicle's message.

"I don't think it's an issue," Mr. Steilen adds. "I believe Malibu's priorities are different from ours. It's a more rational message for Chevy. The G6's message, meanwhile, is about total performance."

consistent performance pitch

"Our marketing efforts are focused on conveying the G6's total performance persona," he adds. "The car is moving quickly on winding roads. Take our `Starting Gate' ad-it shows the vehicle and a horse at the starting gate. Our `Ray' ad, meanwhile, shows the G6 chasing the sun to let the rays in via the vehicle's panoramic sunroof." Publicis Groupe's Chemistri, Troy, Mich., is Pontiac's agency.

"To get the G6 message out, we did the Oprah giveaway and we're heavily into NCAA football and basketball," Mr. Steilen says.

At Saab Cars USA, "The brand message is what's out there right now," says Mike Levens, 9-3 and 9-5 marketing director. "The takeaway message is that Saab is the automotive alternative to help you avoid that sameness."

At Mercury, the "Montego is sophisticated, intelligent, delivering unexpected versatility and functionality," says Michael Murphy, the model's marketing manager. Mercury targeted men primarily, and ads from WPP Group's Y&R, Dearborn, Mich., appear in such publications as Men's Health.

At Ford Division, Mr. White says: "The Five Hundred is our flagship sedan. To convey its degree of luxury and comfort, we use a tone that is upscale, yet still Ford,"

business to epicurean support

Ford has focused on delivering the Five Hundred message via business, leisure, travel and epicurean publications with ads from JWT, Detroit, another unit of WPP.

The carmaker will also sponsor a Ford Five Hundred "Tuscan Sun Festival Tour." The tour will hit 18 locations from April 10-May 1, culminating with a sweepstakes promotion awarding a Five Hundred and a trip to Italy.

Mr. Murphy says he and his Ford counterpart took specific measures to avoid any potential conflict between the two cars: "Long before we took the vehicles to market, [Mr. White] and I sat down and discussed how to reach two goals-not take each other's customers and not to play in each other's sandbox. We said, `Ford, golf is your game. Attract those customers. Mercury is more exclusive.' ... Creating different messages for the vehicles starts with differentiation of product and the timing of the advertising."

Not everyone agrees that the brand messages for these vehicles are clearly delineated.

"The Five Hundred and Montego-and especially Montego-have not established distinct personalities in the minds of customers," says Mr. Libby. "I think the 9-3 and the G6 are differentiated, although I think GM has the same issue with some of its other vehicles."

The 9-3, G6, Five Hundred and Montego have a long way to go before they catch the Toyota Camry or the Honda Accord.

"Being successful is a challenge because there are so many nameplates in the midsize segment," says Ernest Bastien, VP-vehicle operations at Toyota Motor Sales USA. "There are three to four nameplates most customers consider, and most narrow it down to three. The challenge is having the vehicle be the third or fourth on the list, when the first two are the top sellers and well-established. You need a character unique enough to break into the top four of the shopping list."

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