Brand Erosion Hell: How To Tell If Your Favorite Car Company Has Started To Lose Its
01-28-2004, 01:32 AM
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Brand Erosion Hell: How To Tell If Your Favorite Car Company Has Lost Its Way
by Peter M. DeLorenzo
Brand Erosion Hell: How To Tell If Your Favorite Car Company Has Started To Lose Its Way.
Birmingham, MI - Following-up last week's col about the importance of brand image in today's cutthroat automobile market, I thought it would be a good idea to provide a handy guide for automakers and auto enthusiasts alike - so that they can tell when their favorite brand has started to lose its way.
Last week, we sent several Honda and BMW zealots into apoplectic fits because we had the temerity to criticize their favorite car companies in our "On the Table" col. We stand by our criticisms of those two "sacred cow" brands, however, because this business of protecting brands is such a fragile endeavor that even the smallest of missteps can end up derailing a so-called "bullet-proof" brand down the road - even if their current lineup of cars seems to be stellar. I will say that I lumped the BMW 1 Series in with other recent BMW atrocities, and that wasn't accurate or fair. If anything, the 1 Series is shaping up to be the first authentic BMW in years - that is if Helmut Panke and Chris Bangle and Co. can restrain themselves from screwing it up.
So, how can you tell if your favorite automaker has started to lose its way? Well, sometimes it's obvious - whether it's major product gaffes or playing in segments that the automaker doesn't really belong in or fire-sale prices, the big things are easy to see. But other times it's the "little things" that are harder to see and that pile up over time until, all of a sudden, the attitude of "good enough" has replaced the old way of going the extra mile to make things right - and then slowly but surely, little bits and pieces of brand character end up falling by the wayside.
Here are a few examples...
1. If car company executives seem to be spending and inordinate amount of time justifying their actions, that's your first clue that something's wrong. We've seen it countless times since we started this publication (and long before that in the ad biz - ed.), but usually, the more car companies blather to the media and to everyone else about "getting their story out" and the more defensive they get about certain aspects of their new products - it's because there has been an inexorable shift in the wrong direction. For instance, the moment Chris Bangle unleashed his "vision" for BMW's future design direction, BMW executives were put on the defensive at every auto show and at every media event they attended. All of a sudden, the traditional traits that made BMWs so attractive - the inherent goodness of the handling, the sweet motors, etc., became an afterthought. All because BMW had departed from a logical, evolutionary design sequence - in favor of a jarring exercise in visual excess and unabashed self-indulgence. That combined with the fact that BMW engineers became completely lost in their quixotic quest to have electronic technology "add" to the BMW driving experience - when all it did was add another layer between the driver and the road - to create a classic recipe for a brand that has begun to lose its way. There are plenty of other car companies who fit into this category, but BMW certainly is the most visible example - and the company with the most to lose if they can't manage to extract themselves from the brand erosion that has already begun as the result of too many fundamentally bad product decisions.
2. If an established luxury brand all of a sudden feels compelled to become more "approachable" - watch out. At certain times during a luxury automaker's life, there always seems to be a point where a really bad combination of doubt and greed sets in - and heretofore well-meaning executives get it in their heads that if they extend their brand downmarket just a little bit, huge profits await. The problems begin when they actually start talking themselves into believing that these forays into new, lower price point segments can't possibly have an adverse effect on their brand images. And they would be dead wrong for believing that, too. You only have to look at two brands that have embarked into territories where they don't belong - Jaguar and Mercedes-Benz - to see what I'm talking about.
The X-Type has been a disaster from the get-go for Jaguar - no matter what they say to the contrary. The official Ford/Jaguar company line is that the X-Type has accomplished what they set out to do - which was to bring younger buyers into Jaguar brand consideration. The reality is that since the X-Type's very survival in the U.S. market is solely dependent on heavily-supported factory leases, the car has taken the Jaguar brand off of its pedestal and plunged it into payment hell - cheapening the brand in the U.S. market immeasurably. And it's really too bad, because the new XJ8, on the other hand, is a superb car. But when Jaguar is having to shove X-Types out the door with tainted, distress-sale lease prices, while at the same time telling customers that the new XJ8 is worth every penny - a giant disconnect occurs. And what message does that send to the customer, exactly? That some Jaguars are better than others? Probably. Or worse - that some Jaguars aren't "real" Jaguars at all - and those are the ones to be avoided.
As for Mercedes-Benz, some M-B purists will argue that the last great Mercedes was the previous S-Class, that everything since has been cheapened or corrupted by technical and electronic overkill, reduced build quality and poor reliability. And I'd be hard-pressed to argue that point (except for the AMG cars, which are still worth owning). But for me, the moment M-B really lost its bearings was the decision to introduce the now infamous C-Class Coupe - a car that featured a retail price of around $26,000. Overnight, M-B dealers found themselves having to sell these cars against loaded VWs - and any shred of "specialness" attached to the Mercedes-Benz brand literally went right out the showroom window.
Seasoned German auto executives will tell you that Mercedes has always played in a wide range of segments back home and that it shouldn't be such a big deal for M-B to play in a wide range of segments in the U.S. But that logic falls apart when you take into account the image that had been pounded into the American car buyer about Mercedes up until about ten years ago - and that was that Mercedes-Benz cars were "engineered like no other car in the world." Not only did people really believe that about Mercedes - the cars seemed to live up to that reputation, even if they were a bit stodgy.
But when Mercedes-Benz shifted their brand image strategy from one of "technical superiority" to one that revolved around the concept of being "more approachable" in the marketplace, they began a downward spiral that they've yet to pull out of. It didn't help, of course, that the cars seemed less solid, featuring cheaper-looking interior materials for the first time, while suffering from the same German predilection for electronic overkill that plagues BMW.
Despite the current sales numbers and an attitude emanating from their U.S. and German executives that everything is just peachy with Mercedes-Benz, this brand remains as the most classic example of brand erosion in the market today. And I've yet to see any evidence that they a.) get it, or b.) are taking steps to do something about it.
3. Yes, as a matter of fact, in the car business, it is about the "little things." Several years ago, Honda redesigned the front suspension of the Civic, replacing a classically elegant "wishbone" design derived from traditional racing car practice with a cheaper, lowest common denominator McPherson strut design - typically used in more mundane econo-cars. Honda executives breathlessly described (see point #1 above) how these struts wouldn't compromise the Civic's sporty character and said that basically people would not only get used to it, they wouldn't give it another thought after they drove it. But Honda purists went ballistic - and justifiably so. Here was Honda, which built its reputation on building brilliantly innovative racing motorcycles and eventually with creating equally brilliant championship-winning Formula 1 engines - not to mention an impressive array of creative street machines - "copping out" by opting for a cheaper, less creative suspension design to save money. It was a totally baffling move for a company that prided itself on its technical innovations and its "march to a different drummer" attitude - characteristics that separated it from virtually every other mass-market car manufacturer and aligned it more with the boutique high-performance icons of the automotive world. Honda executives bristled at the criticism, of course, insisting that enthusiasts were reading too much into the change and that Honda had not changed its innovative philosophy in the least.
But it remains a significant development, because it seemed to be the "tipping point" from which the Honda brand began a gradual walk away from its previous reputation. No, it did not mean that Honda started churning out inferior products overnight (the S2000, and Acura TL and RSX remain some of our favorites), but it did alarm the Honda purists for all of the right reasons. Where else was Honda cutting corners? What other pieces would Honda determine to be "good enough" - when its previous stance would have never allowed such calculated mediocrity? In short, what else was Honda not doing that they used to do on a regular basis - the things that made Honda, well, Honda.
The Honda Motor Company that was on display at the media conference at the Detroit Auto Show earlier this month was simply not the same car company that once was. Instead, we saw a car company wallowing in "me-too" SUTs, while using a gimmicky robot to represent Honda's creative research into mobility. The previous Honda - that innovative car company that once wowed the rest of the industry on a regular basis, was nowhere to be found.
Now, Honda finds itself being attacked on all fronts by innovative car companies that haven't yet yielded to "good enough" thinking - ones who still believe that the "little things" are absolutely crucial when it comes to brand integrity. Something Honda has either forgotten or at least misplaced, apparently.
Creating a brand image in the car business is an exceedingly difficult endeavor - even when a car company has all of the ingredients in place. It can take literally years to get it right. And yet, maintaining the right brand image "formula" is like juggling a volatile and unstable mixture - and it becomes an endless, day-in, day-out struggle to protect the integrity of the brand, especially with the kind of sheer inertia that these car companies operate under.
That's why when BMW got off track with its Bangle-ized design language and its obsession with electronics - to the detriment of the brand - it's folly to suggest that these missteps won't matter. Yet, when you listen to BMW executives like CEO Helmut Panke, you can tell that they're scoffing at any suggestion that they have somehow lost their mojo and insisting that absolutely nothing can derail them from keeping their title as one of the most sought-after brands. But I argue that it has already begun for BMW, that the slow but sure erosion of BMW's brand image is well under way. BMW will have to stop being obsessed with sales numbers and start worrying about the authenticity of their cars before I believe that they understand what's happening - and what needs to be done to stop it.
BMW's big problem is that they've forgotten who they are. They've gone from being the thinking-person's sport sedan to becoming almost a caricature of themselves in the marketplace. Bloated, terminally electronically-assisted "luxury" cars have nothing to do with BMW's brand image. We'll have to wait for the 1 Series to see if they can get back on the right track.
Half the battle for a car company in creating a brand image is knowing who they are and what their brand stands for - or at least what they'd like it to stand for.
Honda's problem is that they've forgotten who they are. Or maybe it's that they don't want to be who they once were anymore - they're more comfortable with aiming a little lower. After all, mediocrity is bliss for a lot of car companies. It's a lot easier to be a "me-too" car company than to live up to a past reputation.
In Jaguar's case, it seems to be intent on trying to be something it's not - which is a manufacturer of "near-luxury" automobiles. That's not brand erosion - that's brand delusion. People want beautiful, elegant and even fast Jaguars. They don't want Jaguar poseurs running around, "faux" Jaguars with similar design cues but with none of the substance of a proper Jaguar. Why is that so obvious to everyone but the Jaguar brain trust?
And Mercedes-Benz actually believes they can do whatever they want in the market and it will work out. They remind me of the "old" GM - a company that acted like the world still revolved around them a good 15 years after that ceased being the case. There's a whiff of arrogance hanging from every communication and statement emanating from Mercedes-Benz, and it's still obvious they believe that they can enter any segment without impunity - and with no brand erosion to speak of.
But they're flat-out kidding themselves.
There's a time lag at work here - in that a car company's bone-headed moves have a cumulative, negative effect. Mercedes-Benz has now been mired in poor quality ratings for three years running. They have unleashed a series of very "un-Mercedes-like" cars that have neither the presence nor the street "cred" of their previous cars. In the midst of straining for more sales volume, Mercedes has eroded its brand equity by building more vehicles that seem to play to the lowest common denominator. And now, the biggest sign of real brand erosion for Mercedes? Their resale numbers are spiraling downward.
In other words, Mercedes-Benz has forgotten who they are and what got them to this point to begin with. It's not brand erosion in their case - it's more like brand implosion.
This industry is littered with car companies that have been doomed to Brand Erosion Hell - to the names mentioned above you can add names like Buick, Chevrolet, Ford, Pontiac, Saab, Saturn, Porsche and a few more. At one time or another, they either lost it, found it or couldn't find it if you laid out a trail of bread crumbs to help them find it again.
And all of these auto manufacturers that have found themselves in Brand Erosion Hell share the same basic things:
Either they forgot who they are, don't remember who they are, or can't, for the life of them, figure out who they want to be.
Brand Erosion Hell: How To Tell If Your Favorite Car Company Has Started To Lose Its Way.
Birmingham, MI - Following-up last week's col about the importance of brand image in today's cutthroat automobile market, I thought it would be a good idea to provide a handy guide for automakers and auto enthusiasts alike - so that they can tell when their favorite brand has started to lose its way.
Last week, we sent several Honda and BMW zealots into apoplectic fits because we had the temerity to criticize their favorite car companies in our "On the Table" col. We stand by our criticisms of those two "sacred cow" brands, however, because this business of protecting brands is such a fragile endeavor that even the smallest of missteps can end up derailing a so-called "bullet-proof" brand down the road - even if their current lineup of cars seems to be stellar. I will say that I lumped the BMW 1 Series in with other recent BMW atrocities, and that wasn't accurate or fair. If anything, the 1 Series is shaping up to be the first authentic BMW in years - that is if Helmut Panke and Chris Bangle and Co. can restrain themselves from screwing it up.
So, how can you tell if your favorite automaker has started to lose its way? Well, sometimes it's obvious - whether it's major product gaffes or playing in segments that the automaker doesn't really belong in or fire-sale prices, the big things are easy to see. But other times it's the "little things" that are harder to see and that pile up over time until, all of a sudden, the attitude of "good enough" has replaced the old way of going the extra mile to make things right - and then slowly but surely, little bits and pieces of brand character end up falling by the wayside.
Here are a few examples...
1. If car company executives seem to be spending and inordinate amount of time justifying their actions, that's your first clue that something's wrong. We've seen it countless times since we started this publication (and long before that in the ad biz - ed.), but usually, the more car companies blather to the media and to everyone else about "getting their story out" and the more defensive they get about certain aspects of their new products - it's because there has been an inexorable shift in the wrong direction. For instance, the moment Chris Bangle unleashed his "vision" for BMW's future design direction, BMW executives were put on the defensive at every auto show and at every media event they attended. All of a sudden, the traditional traits that made BMWs so attractive - the inherent goodness of the handling, the sweet motors, etc., became an afterthought. All because BMW had departed from a logical, evolutionary design sequence - in favor of a jarring exercise in visual excess and unabashed self-indulgence. That combined with the fact that BMW engineers became completely lost in their quixotic quest to have electronic technology "add" to the BMW driving experience - when all it did was add another layer between the driver and the road - to create a classic recipe for a brand that has begun to lose its way. There are plenty of other car companies who fit into this category, but BMW certainly is the most visible example - and the company with the most to lose if they can't manage to extract themselves from the brand erosion that has already begun as the result of too many fundamentally bad product decisions.
2. If an established luxury brand all of a sudden feels compelled to become more "approachable" - watch out. At certain times during a luxury automaker's life, there always seems to be a point where a really bad combination of doubt and greed sets in - and heretofore well-meaning executives get it in their heads that if they extend their brand downmarket just a little bit, huge profits await. The problems begin when they actually start talking themselves into believing that these forays into new, lower price point segments can't possibly have an adverse effect on their brand images. And they would be dead wrong for believing that, too. You only have to look at two brands that have embarked into territories where they don't belong - Jaguar and Mercedes-Benz - to see what I'm talking about.
The X-Type has been a disaster from the get-go for Jaguar - no matter what they say to the contrary. The official Ford/Jaguar company line is that the X-Type has accomplished what they set out to do - which was to bring younger buyers into Jaguar brand consideration. The reality is that since the X-Type's very survival in the U.S. market is solely dependent on heavily-supported factory leases, the car has taken the Jaguar brand off of its pedestal and plunged it into payment hell - cheapening the brand in the U.S. market immeasurably. And it's really too bad, because the new XJ8, on the other hand, is a superb car. But when Jaguar is having to shove X-Types out the door with tainted, distress-sale lease prices, while at the same time telling customers that the new XJ8 is worth every penny - a giant disconnect occurs. And what message does that send to the customer, exactly? That some Jaguars are better than others? Probably. Or worse - that some Jaguars aren't "real" Jaguars at all - and those are the ones to be avoided.
As for Mercedes-Benz, some M-B purists will argue that the last great Mercedes was the previous S-Class, that everything since has been cheapened or corrupted by technical and electronic overkill, reduced build quality and poor reliability. And I'd be hard-pressed to argue that point (except for the AMG cars, which are still worth owning). But for me, the moment M-B really lost its bearings was the decision to introduce the now infamous C-Class Coupe - a car that featured a retail price of around $26,000. Overnight, M-B dealers found themselves having to sell these cars against loaded VWs - and any shred of "specialness" attached to the Mercedes-Benz brand literally went right out the showroom window.
Seasoned German auto executives will tell you that Mercedes has always played in a wide range of segments back home and that it shouldn't be such a big deal for M-B to play in a wide range of segments in the U.S. But that logic falls apart when you take into account the image that had been pounded into the American car buyer about Mercedes up until about ten years ago - and that was that Mercedes-Benz cars were "engineered like no other car in the world." Not only did people really believe that about Mercedes - the cars seemed to live up to that reputation, even if they were a bit stodgy.
But when Mercedes-Benz shifted their brand image strategy from one of "technical superiority" to one that revolved around the concept of being "more approachable" in the marketplace, they began a downward spiral that they've yet to pull out of. It didn't help, of course, that the cars seemed less solid, featuring cheaper-looking interior materials for the first time, while suffering from the same German predilection for electronic overkill that plagues BMW.
Despite the current sales numbers and an attitude emanating from their U.S. and German executives that everything is just peachy with Mercedes-Benz, this brand remains as the most classic example of brand erosion in the market today. And I've yet to see any evidence that they a.) get it, or b.) are taking steps to do something about it.
3. Yes, as a matter of fact, in the car business, it is about the "little things." Several years ago, Honda redesigned the front suspension of the Civic, replacing a classically elegant "wishbone" design derived from traditional racing car practice with a cheaper, lowest common denominator McPherson strut design - typically used in more mundane econo-cars. Honda executives breathlessly described (see point #1 above) how these struts wouldn't compromise the Civic's sporty character and said that basically people would not only get used to it, they wouldn't give it another thought after they drove it. But Honda purists went ballistic - and justifiably so. Here was Honda, which built its reputation on building brilliantly innovative racing motorcycles and eventually with creating equally brilliant championship-winning Formula 1 engines - not to mention an impressive array of creative street machines - "copping out" by opting for a cheaper, less creative suspension design to save money. It was a totally baffling move for a company that prided itself on its technical innovations and its "march to a different drummer" attitude - characteristics that separated it from virtually every other mass-market car manufacturer and aligned it more with the boutique high-performance icons of the automotive world. Honda executives bristled at the criticism, of course, insisting that enthusiasts were reading too much into the change and that Honda had not changed its innovative philosophy in the least.
But it remains a significant development, because it seemed to be the "tipping point" from which the Honda brand began a gradual walk away from its previous reputation. No, it did not mean that Honda started churning out inferior products overnight (the S2000, and Acura TL and RSX remain some of our favorites), but it did alarm the Honda purists for all of the right reasons. Where else was Honda cutting corners? What other pieces would Honda determine to be "good enough" - when its previous stance would have never allowed such calculated mediocrity? In short, what else was Honda not doing that they used to do on a regular basis - the things that made Honda, well, Honda.
The Honda Motor Company that was on display at the media conference at the Detroit Auto Show earlier this month was simply not the same car company that once was. Instead, we saw a car company wallowing in "me-too" SUTs, while using a gimmicky robot to represent Honda's creative research into mobility. The previous Honda - that innovative car company that once wowed the rest of the industry on a regular basis, was nowhere to be found.
Now, Honda finds itself being attacked on all fronts by innovative car companies that haven't yet yielded to "good enough" thinking - ones who still believe that the "little things" are absolutely crucial when it comes to brand integrity. Something Honda has either forgotten or at least misplaced, apparently.
Creating a brand image in the car business is an exceedingly difficult endeavor - even when a car company has all of the ingredients in place. It can take literally years to get it right. And yet, maintaining the right brand image "formula" is like juggling a volatile and unstable mixture - and it becomes an endless, day-in, day-out struggle to protect the integrity of the brand, especially with the kind of sheer inertia that these car companies operate under.
That's why when BMW got off track with its Bangle-ized design language and its obsession with electronics - to the detriment of the brand - it's folly to suggest that these missteps won't matter. Yet, when you listen to BMW executives like CEO Helmut Panke, you can tell that they're scoffing at any suggestion that they have somehow lost their mojo and insisting that absolutely nothing can derail them from keeping their title as one of the most sought-after brands. But I argue that it has already begun for BMW, that the slow but sure erosion of BMW's brand image is well under way. BMW will have to stop being obsessed with sales numbers and start worrying about the authenticity of their cars before I believe that they understand what's happening - and what needs to be done to stop it.
BMW's big problem is that they've forgotten who they are. They've gone from being the thinking-person's sport sedan to becoming almost a caricature of themselves in the marketplace. Bloated, terminally electronically-assisted "luxury" cars have nothing to do with BMW's brand image. We'll have to wait for the 1 Series to see if they can get back on the right track.
Half the battle for a car company in creating a brand image is knowing who they are and what their brand stands for - or at least what they'd like it to stand for.
Honda's problem is that they've forgotten who they are. Or maybe it's that they don't want to be who they once were anymore - they're more comfortable with aiming a little lower. After all, mediocrity is bliss for a lot of car companies. It's a lot easier to be a "me-too" car company than to live up to a past reputation.
In Jaguar's case, it seems to be intent on trying to be something it's not - which is a manufacturer of "near-luxury" automobiles. That's not brand erosion - that's brand delusion. People want beautiful, elegant and even fast Jaguars. They don't want Jaguar poseurs running around, "faux" Jaguars with similar design cues but with none of the substance of a proper Jaguar. Why is that so obvious to everyone but the Jaguar brain trust?
And Mercedes-Benz actually believes they can do whatever they want in the market and it will work out. They remind me of the "old" GM - a company that acted like the world still revolved around them a good 15 years after that ceased being the case. There's a whiff of arrogance hanging from every communication and statement emanating from Mercedes-Benz, and it's still obvious they believe that they can enter any segment without impunity - and with no brand erosion to speak of.
But they're flat-out kidding themselves.
There's a time lag at work here - in that a car company's bone-headed moves have a cumulative, negative effect. Mercedes-Benz has now been mired in poor quality ratings for three years running. They have unleashed a series of very "un-Mercedes-like" cars that have neither the presence nor the street "cred" of their previous cars. In the midst of straining for more sales volume, Mercedes has eroded its brand equity by building more vehicles that seem to play to the lowest common denominator. And now, the biggest sign of real brand erosion for Mercedes? Their resale numbers are spiraling downward.
In other words, Mercedes-Benz has forgotten who they are and what got them to this point to begin with. It's not brand erosion in their case - it's more like brand implosion.
This industry is littered with car companies that have been doomed to Brand Erosion Hell - to the names mentioned above you can add names like Buick, Chevrolet, Ford, Pontiac, Saab, Saturn, Porsche and a few more. At one time or another, they either lost it, found it or couldn't find it if you laid out a trail of bread crumbs to help them find it again.
And all of these auto manufacturers that have found themselves in Brand Erosion Hell share the same basic things:
Either they forgot who they are, don't remember who they are, or can't, for the life of them, figure out who they want to be.
01-28-2004, 12:56 PM
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Saab is another good example...but it appears they've gotten back on track.
I see Pontiac needing a good shot of "Driving Excitement" soon, or they'll be on the short bus too.
I see Pontiac needing a good shot of "Driving Excitement" soon, or they'll be on the short bus too.
01-29-2004, 09:02 AM
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What do you guys think about VW and what they're doing to their brand by starting to cater to the more expensive crowd at a lower price. I've been really interested to see what happens now that they have both the Phaeton and the T-Reg out on the market. It could be that their degrading in a way by going up in price and quality because they are straying from what their products are traditionally known for. But I'm really curious to see how it all plays out with their attempt to recapture their sales in a different market.
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01-29-2004, 09:41 AM
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Good analysis and he could have brought so many other example. For example for Honda, what about the VTEC system? Meaning, they came out as pioneers of variable valve timing (although Alfa Romeo can debate this) and rested on their laurels for 15 years. When suddenly everyone else is doing it better than them.
Same with the NSX. When it came out, it was noteworthy. Then they rested for 15 years. What he hell?
Same with the NSX. When it came out, it was noteworthy. Then they rested for 15 years. What he hell?
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