Wednesday, 18 June 2008

Industry Practice – Marketing – The Need for Retailing “Options & Accessories”

It has been a long time aspiration, but step by step (even if inch by inch) the old guard of triad region automakers in Europe, USA and Japan, are moving up the value curve. As the East continues to swell, capitalising on what seem to an increasingly post-industrial 'West' yesteryear industrial models, the heavy fiscal and operational burden of manufacture is being replaced by the idealism of cashflow based marketing models stemmed from a mix of black art and consumer science.

Since Jacques Nasser heralded Ford 2000 back in the mid/late 1990s, effectively setting out a premis that an auto-company should convert from pure producer & financier to retail & 'through life' service providers [Brand Enterprises] exploiting higher margin, broader scope revenue streams, many companies have sought to develop their interaction with the public and consumer, and of course better orchestrate their inherent relationships with franchised and independent dealers – the crucial arbiters of the brand experience.

And where commercial attention leads, so consulting services follow. Thus over the last decade 2 spotlights have shone brighter than ever upon the marketing arena and:

a) industry norm marketing practices.
b) 'new era' marketing possibilities.

For respectively honing via assessment and measurement of marketing budget spend, and better connecting product, brand, service and company with ever refined definitions of consumer categories. As a result, the full spectrum of the sales and marketing process, from Research to After-Care, has been diligently de-constructed.

An economically restrained post tech bubble and post 9-11 era, in which profitability reigned to rebuild corporate credibility and support stock and capital markets, meant that companies have (and still do) effectively run operationally 'lean', boards demanding accountability and creativity from sales and marketing activities to make every penny & cent count whilst creating new consumer interactions.

Marketing consulting services tend to balk at the age old comedic quip about “knowing that 50% of marketing spend works and 50% fails, but unable to identify which is which”, and so in such lean times there has been a B2B market for injecting discipline and science into the black art; some of it credible, some not. In this vein we've witnessed the like of Milward Brown create 'Brandz' – a multi-criteria based ranking (including financials) of global brands and their inherent multi-dimensional characteristics; a methodology that's become almost evangelical in certain echelons. From the opposite earnest approach, Ernst & Young have incorporated today's commercial focus on instability into their consulting offering, with the conservative (with a small 'c') 'Marketing & Advertising Risk Services'.

Thus we appear to live in paradoxical marketing times, a dualistic age, that is keen to avoid excess and budgetary waste, yet also recognise the necessity to move beyond the boundaries of 'safe' or 'blame reduction' conventional practices to alternative 'new era' approaches that embrace the modern fast changing zeitgeist.

That zeitgeist has been unquestionably altered by the web and now 'web 2.0', cyberspace now creating a spectrum of S&M offerings, spanning subtle psychological engaging promotional mini-movies that build-up brand associations without explicit strap-lining or 'tagging', to very obvious basic raw pricing and specifications data – each of these and other offerings directly linked to each aspect of the “attract - engage – convert – sell – re-capture” sales chain.

The increasingly important virtual world is creating ambiance and leading expectation more than ever before, the personal computer screen being far more 'personal' than the radio, TV or cinema-screen. [In hyper-reality speak “merging object (brand) and subject (consumer) into a unified universe”].

However, whilst such powerful corporate-worlds are being created in cyber-space there is undeniably a growing chasm between the picture-perfect virtual world and its alignment with the human fallibility of the physical world. Perhaps none more evident than in the automotive sector, where the real world face of the created corporate idyll is an often independent automotive dealer-base. And here is the obvious rub of expectation and reality. Whilst the company spends millions on building its brand and endeavouring to create consumer nirvana, the dealer-base - consisting of far more financially fragile entities – focuses its eye on the bottom-line, using typically less than sophisticated client negotiation methods to shift the metal.
Thus the created dream can be dashed in the cut and thrust of commercialism.

VMs obviously recognise the 'chasm' problem, and know that with the advent of cyber-space and raising of consumer desires that the chasm has invariably grown, presenting a sizable challenge for Dealer Managers in balancing the stakeholder expectations of both the public and the franchise dealer. Of course the traditional typical solution to 'closing the chasm' is: evaluation and re-organisation of the dealer-chain for 'cultural re-alignment' (through contractual dissolvement and renewel), infrastructure up-grades across signage/showroom/building exterior/ landscaping (& possibly re-location) and operational re-training for dealer management and staff.

But of course in such lean times the costs of raising the infrastructure & service quality bar does not come cheap. And although the automaker will cite that the costs can be off-set through accounting depreciation, the onus is obviously on the dealer to absorb the expenditure, and that can only be done through a direct conversion into turnover and gross profitability. If not immediately successful in increasing foot-fall and unit sales, the increasing worry is that such high investment costs has the potential to make or break the dealer; perceived as more likely the latter in these stated lean times.

More than ever both parties VM & dealer-base must debate how to look beyond the traditional approaches and create cost-effective, mutually complimentary advertising and retailing strategies. Strategies that work within the critical intersect of virtual and physical worlds. More than the temporary marketing drives that is the industry's default position (and in reality have little long-reach affirmable impact) the onus is the 'strategic' not the 'tactical'.

They must be born from consistent, aligned creative endeavours that need to be woven into business-as-usual practice, expanding the marketeering mindset beyond usual advertising “above, below & across the line” and go beyond the use of even more cyber-facet media buying such as the now conventional web-based viral marketing. (The novelty of a drumming gorilla sells chocolate bars, but more intelligence and respect is required to sell a vehicle). And such screen based media fragmentation only serves to perpetuate the “50%” adage. Thus VMs and dealers must look beyond the sales blurb of conventional advertising and media-buying service circles and attend to the 'virtual-physical chasm', creating strong links to mesh these two distinct worlds – to create physically based cyber bridges.

In this regard, we believe Daimler's >smart brand has been an inspiration in looking to see how to connect with potential consumers in alternative ways. To match its original product offering, from the very beginning >smart created its own distinct S&M ethos and messages centred around fun and toy-like yet also intelligent and sophisticated – balancing the apparent paradox. A sense of hyper-reality (so key to the post- modern consumerism of the late 90s & 2000s) was woven into its being - far more so than the obvious product and service creations from VW, BMW and Ford for their post-modern re-interpretations of Beetle, Mini, Thunderbird/Mustang/GT40. From the stacking of smartcars in glass towers (a la children's toy car carry-cases) to early adoption of web-channels.

The toy-like alignment, although obviously more associative to a small, novel vehicle, was key in stirring the emotional dimension of the public at large, re-connecting with the automobile in a way that hadn't been done since childhood. Yes, VW, BMW & Ford have played the same card buy Daimler did it with far greater understanding.

Part of that has been the simple but powerful use of the 'model-car' showcase box, the insertion of the vehicle into this glass-walled box cognitively removed it from the world of normal cars, and whilst on the surface just a gimmick played a far greater role in placing the vehicle in that all important intersect of the virtual and the real. These boxes have been, and still are, placed in non-car related environs, such as malls and so have doubly removed smart from the auto-norm. Some boxes were created as akin to art gallery glass-cases mimicking those holding modern art installations, such as a Damien Hirst, so elevating the very perception of the vehicle to that of a piece of object d'art – like a showcased classic Ferrari or museum held Model T. As mentioned, other boxes were designed to mimic the 'model car' box and instead placed directly on the street in parking bays or within a line of parked cars to highlight the juxtaposition and demonstrate the difference between the >smart and the conventional.

SEAT tried to copy the car-in-a-box initiative with their recent models exhibited under glass on the back of flat-bed trucks traversing European cities. Not as successful and obviously derivative, but combine the 2 initiatives of juxtaposition and logistics and another, potentially high impact – possibility comes to mind.

investment-auto-motives believes that this combine used as part of the vehicle delivery process to develop the buyer's brand experience could be powerful tools in enhancing enjoyment, satisfaction and product & brand connection.

Just as new cars have become nigh-on ubiquitous in advanced markets, easily replaceable and near commodity-like due to production overcapacity and easy purchase terms; so the thrill of ordering, anticipating and receiving a new car has been lost. Automakers obviously evaluate how to build-up the front-end of the purchase process, adopting customer service approaches from the sector's best-in-class operators and embracing learning from hotel and fashion sectors. But they need more to stay ahead and engage the buyer, making the car purchase experience unlike any other retail experience a consumer goes through.

Delivering a new car to a customer's residence (where possible) in a 'show-box' makes an obvious 'new car' statement to the neighbours and provides a literal just-out-of-the-box glee and satisfaction to the excited buyer.

[These 'show-boxes' could be in turn be re-cycled through new uses from >smart sponsored public transport shelters to garden glass houses to short-stay summer cabins in rural areas etc etc, ultimately dismantled and materially re-cycled]

The showcase box is just one idea of creating within the intersect of the virtual and the real. More needs to imagined and deployed.

So just as vehicles themselves have a myriad of options and accessories as part of a myriad of features, so why shouldn't the same approach be used for the 'engagement' process? Of course the luxury marques such as Rolls-Royce, Bentley, Porsche, BMW etc already have expansive customer relationship management initiatives, from holidays to track days; aspects that can be absorbed in the operational overhead by high margins and indeed 'bolted-on' as additional revenue streams.

But such options are not available to the cost-conscious, mainstream VM. Instead the mainstream must - to re-appropriate the much hackneyed phrase - “think out of the box”...and just possibly how to use the box itself.