Incentive plans changed ad equation
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Factory ads generally seek to create a desirable brand image and stimulate consumer demand for the product, advertising experts say. By contrast, dealer advertising historically has conveyed the message: "Buy now."
But the employee-discount programs of General Motors, Ford Motor Co. and the Chrysler group used national advertising to sell the deal rather than the vehicle. The fallout, critics say, has been brand erosion and a wider gap between domestic automakers and import brands that could still sell the product, not the price.
The shift has created "almost a black-and-white difference" in the way the Detroit 3 and import manufacturers merchandise vehicles, says veteran dealer Ron Tonkin, of Portland, Ore.
"The domestics have been scrambling, not so much to build desire as to create a fire-sale atmosphere that will convince the public they should buy the product because it is one hell of a buy," says Tonkin, whose dealership group operates 18 domestic and import franchises. "It is too much on price."
At the same time, Tonkin says: "The import automaker is still explaining what the pluses of the vehicle are. They are still trying to build desire."
The Detroit 3's employee-discount advertising offered a message "that the dealer should be delivering," says Jim Mudd Sr., founder of The Mudd Group advertising agency in Cedar Falls, Iowa. "What that campaign did was take control of the transaction away from the dealer at the point of purchase."
Promoting price discounts also weakened domestic brands, Mudd says. "The manufacturer got into retail advertising, which they are not positioned to do very well," he told Automotive News.
Auto advertising needs to create "an emotional tie" with buyers, says Rob Mudd, president of the agency division at The Mudd Group. "What the domestics have to do is go back and tie emotion to their product," he says.
Instead, Rob Mudd argues, employee-pricing campaigns foster "a transactional relationship. They are making the product a commodity."
A proliferation of vehicle brands and competitive pressures have changed the auto advertising landscape, says Daniel Gorrell, automotive vice president of Strategic Vision, a consulting firm in Tustin, Calif.
"Brand is a great ideal, but you have to survive," Gorrell says. "More and more, (the emphasis) is going to be on retail because of the competition out there. There are too many players."
Automakers, Gorrell adds, "will be forced into assuming a much more tactical position. Price will be part of that."
You may e-mail Mary Connelly at mconnelly@crain.com
