A disconnect: Tech, quality -- and a so-so image
Smarter marketing is a priority for Palmer
TOKYO -- For Nissan Motor Corp. executives, including CEO Carlos Ghosn and global sales and marketing boss Andy Palmer, it just doesn't add up.
The lineup is loaded with high-tech, high-quality products. But Nissan still trails its rivals in public opinion of the brand as well as market share and sales.
It's a source of internal consternation at Nissan and a problem the frustrated Ghosn has ordered Palmer to tackle through more aggressive, smarter marketing.
"We want Nissan to be recognized for what it is. It is a technological powerhouse. It is an innovator in terms of concepts and products. And that's what we're doing," Ghosn told Automotive News in November at the Tokyo Motor Show.
"From time to time, we have some surprises. We have cars that seem to us very good. It goes to the market, we don't have a good rating," Ghosn said. "The question is then how come internally we considered it a good car, but when it goes to the market, Consumer Reports or somebody else is saying 'No, no. This is not recommended.'"
Case in point: In October, Nissan failed to win the magazine's coveted "recommended" rating for the redesigned Infiniti Q50 sedan. Adding insult to injury, the car's predecessor, the Infiniti G37, which is still sold at a lower price, was the segment's top pick.
The company has invested billions of dollars in advanced electric vehicles. It has trumpeted plans to develop an autonomous-driving car by 2020. Its Infiniti luxury brand has taken a lead in steer-by-wire technology. Quality scores have steadily improved.
Yet the public isn't showing the love, Ghosn complains.
"You need to make sure you are explaining this to the consumer," Ghosn said. "We have put a lot of effort into developing the technology. Now it's time to put a lot of effort into explaining the technology.
"The brand can be much more powerful than what it is today."
Palmer agrees: "It's a fact that our products and our actions are better than our marketing. The electric car isn't fully recognized, for example, by everybody."
Higher prices, share
Palmer says better brand opinion will translate into higher prices and market share.
He wouldn't say how much Nissan spends on marketing. Spending has increased, he says, but the budget has remained steady as a percentage of revenue.
What Nissan has done is focus its spending better. Gone are cluttered ads driving customers to a deal. In is a refined, unified look under the tag line "Innovation that Excites."
"The first good point is that marketing actions are already catching up with what was already a reasonable good set of products," Palmer said.
On some fronts, his brands are gaining ground. By other measures, there is plenty of work to do.
In incentives, the Nissan brand managed to hold the line last year, keeping its average spending flat at $2,356 per vehicle, despite an 8 percent rise in industrywide average spending to $2,402 per vehicle, according to Edmunds.com. Infiniti, however, doled out a lot more incentives, with its average per-vehicle incentive spending soaring 46 percent to $5,352.
Even with the spiffs, Infiniti's 2013 sales slipped 3 percent in a market that rose 8 percent. Nissan brand's sales, however, rose 11 percent.
Or consider transaction prices, a measure of how much consumers are willing to pay for a brand's products.
In 2013, Infiniti's average transaction price rose 2 percent from a year earlier to $47,142, according to Edmunds.com. The Nissan brand's average transaction price was basically unchanged at $26,139 last year. But both brands trailed the overall industry, which had a 3 percent increase in average transaction price to $31,773.
The automaker wants both measures to improve. But Palmer cautions not to expect overnight results.
"If you work on this, it's not going to give you quick returns because there is an inertia effect," Palmer said. "Overall opinion has a time lag of at least six months, if not longer."
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