Overdrive

Posted on by Chief Marketer Staff

When Kenny Loggins played “Footloose” at Camp Jeep this summer, Lou Bitonti couldn’t sit still. As merchandising manager for Chrysler Corp. division, Bitonti had arranged the weeklong event and booked Loggins, who played at the first Camp Jeep four years ago. As a drummer who spent high school and college playing in garage bands, Bitonti was getting itchy backstage.

“I looked on stage, and there was no one on the congas,” he says. “I thought, ‘What the hell, I paid for this,’ and I slipped on-stage to play along. There I am, banging on the congas, when there’s a break in the song and the whole band stops – except me. I’m still banging away.”

That’s the tune playing on car radios everywhere this year: The auto industry is catching its breath for the next bridge, while marketing carries on in the breach.

This has been a momentous year for Detroit, from the crippling strike at General Motors to the ambitious growth of megastores like H. Wayne Huizenga’s AutoNation USA, which aims for $60 billion in annual sales by 2003. The strike against GM and the company’s subsequent restructuring is the most dramatic episode among sea changes in management, marketing, and retailing across the $300 billion new-car industry. As marketers rethink how – and where – they go to market, they’re also rethinking consumer promotions, opting for more image-builders to balance out price incentives and to rally dealers, whether traditional lots or new megastore chains.

GM is consolidating its marketing staff under vp-group exec for North America Ron Zarrella, with plans to cut 15 to 25 percent of its 5,100 sales, marketing, and service personnel by January. The company is reconfiguring its field organization with fewer sales reps covering smaller geographic territory and representing all divisions, rather than six reps in the territory, one for each division. That way each rep can get to know each dealer’s business more deeply, and the dealer has one salesman calling, not six.

This year price discounts take on a new fervor for the fourth quarter as GM pumps ’98 models into market later than usual, at higher discounts to regain market share it lost during the strike. This spring GM mailed $500 and $1,000 coupons to current owners, and Ford Motor Co. followed suit. Traditional quarterly rebates have trained shoppers to wait for a deal.

GM has set the most aggressive consumer promotion strategy since adopting Procter & Gamble’s brand management model two years ago, but Ford and Chrysler also are revving up promotion work and honing events to spark test drives among targeted consumer groups.

“We have such huge ad budgets, and can be so arrogant about it,” says one marketing exec. “Not everyone can afford a $30,000 car, so why advertise it to everyone?”

Expect to see more promotion agency-of-record assignments as auto marketers sharpen consumer promotions to enhance ads and direct marketing. GM’s Oldsmobile division set the precedent in 1996 when it hired Frankel & Co., Chicago, for promos because ad shop Leo Burnett “just didn’t have the expertise we needed,” says GM exec Bob Schaffer, who was promotion manager for Olds at the time. “We went from 85 disconnected promotions a year to four major ones to do them deeper and better, and every element had to fit. The shift to more promotional strategic thinking was very controversial, because the power base was traditionally in advertising. The above- and below-the-line has to blur more to make your marketing programs really play for you. [On the other hand], promotional folks can be their own worst enemy. We’re such push marketers that we’re focused on the end result. We need brand-building activities, but how does that fit with trial?”

Model intros = promos Trial drives new products, whether it’s a sample of laundry soap or the almighty test drive. These days the market is so crowded that new models need more than an ad blitz to get noticed, and to spur trial. To kick off an 18-month launch calendar, Oldsmobile is running a $20 million sweepstakes with ABC-TV this fall to introduce Alero, an entry-level car pegged to become “our highest volume brand,” says Doug Schumacker, Alero assistant brand manager-marketing. To drum up that kind of volume, Alero needs “a really big purchase funnel,” a high-visibility mass-market campaign with a sampling hook.

The watch-and-win sweeps, Start Something on Tuesday Nights, pairs ABC affiliates with retailers like Blockbuster, where shoppers get an entry form and answer trivia questions about ABC shows. Olds will give away 160 Aleros – the most cars ever awarded, Schumacker says – in ceremonies at local dealers. (Having cars on the road is a subtle but effective endorsement.) ABC’s promotion agency MCA, Westport, CT, handles.

Olds approached ABC after the success of Pontiac’s Grand Prix-miere Giveaway in 1996. ABC developed Start Something, and sold it in to af1/2liate stations, who in turn recruited local retailers.

Olds told ABC not to go to dealers 1/2rst, because dealers prefer qualified leads to generic traffic into the dealership. Still, some dealers felt the exposure was worth the trade-off of drawing crowds, and signed up for the sweeps in nearly a quarter of Olds’ markets. Headquarters will cull good sales leads from entry forms, and follow up with direct-mail from dealers. “Some companies with a lot of resources would follow-up with everyone who entered,” Schumacker says. “We’re very focused on only good prospects, because of resource constraints.” Here, it seems, is where the funnel gets narrow.

If the sweeps draws as many qualified buyers as Alero’s fourth-quarter online promotion, Schumacker will be happy. The Start Something Online sweeps with Buena Vista put a link to Alero’s site on 20 Disney sites, including disney.com and abc.com, and each month gives away a car and trip for two to a Disney destination. Of the average 1,300 entries per day, nearly 40 percent plan to buy a car in the next 12 months. “If we can do that on ABC,” Schumacker says, “it’ll be great.”

Ford’s Lincoln-Mercury division “basically launched Cougar on the Internet,” says Laurie Null, managing director of Mercury agency Wunderman Cato Johnson, Detroit. The small sports car appeals to women 25 to 35, not Mercury’s traditional audience. A Web campaign let younger shoppers self-select as potential buyers. “This is kind of a fling car – it’s very hard to predict who’ll buy it,” Null says. “We wanted to get people to raise their hands and identify themselves as a target, and then get them into the mail stream.”

Consumers visiting the Cougar Cyber Cafe at www.mercuryvehicles.com entered a sweeps to win a Cougar, and sent e-postcards to friends to automatically enter them, too. Mercury followed up with direct-mail lenticular postcards, postcard packs to share with friends, and T-shirts. The site got 106,000 entries in the four months before Cougar hit showrooms.

The Cafe – and a traveling version touring 40 markets – was the kind of off-site exposure Cougar needed because “people aren’t going to stumble on it in the dealership,” Null says.

Old models, new options Sponsorships, events, and direct marketing get ever more sophisticated as they pull a bigger slice of marketing budgets.

Last year GM re-upped as an of1/2cial Olympic Games sponsor after 16 years on the sidelines. It sponsored the games from ’72 through ’84, but quit when rights fees skyrocketed. The 10-year deal that kicks off with the 2000 games includes TV rights with NBC, and GM’s six divisions could divvy up the costs.

Sports still account for the majority of automakers’ sponsorship dollars, but companies are reaching beyond golf and racing to sports that draw younger consumers, like cycling and snowboarding. They’re also getting more out of longtime deals.

Ford extended its NASCAR sponsorship this fall to take advantage of NASCAR’s DC Comics deal that put superhero Batman and his nemesis Joker on race cars. Ford – whose Taurus model runs NASCAR races – crafted a premium offer for Quality Care service customers. (Repair service can be worth 2.5 times the profit of new-car sales.) From September through November, Ford owners who spend $50 on dealership service get a free 1/32 scale model NASCAR car. Dealers also use the cars as test-drive premiums, or sell the models outright. Upshot, Chicago, developed the program after Ford ordered the premiums from Upshot parent Ha-Lo Industries, Niles, IL.

“They had a beginning – NASCAR’s Showdown in Charlotte event – and an end, collectible cars. We just developed a middle for it,” and included dealers, says Upshot exec vp Jeffrey Davidoff.

“NASCAR can play an increasingly big role for Ford,” he adds. “The challenge in the auto industry now is to get people excited about cars. Everyone’s excited about trucks and minivans.”

Events organizers are getting more sophisticated and aggressive, selling elaborate marketing packages rather than just sponsorship rights, says GM’s Schaffer. With budgets tightening and measurement getting more rigorous, marketers are squeezing as much as they can from sponsorships.

“When you use sponsorships more deeply, it’s the vehicle to deliver the message, not the message itself,” he says. “If I can wrap my car in something relevant to you, you’re more likely to hear my message.”

Auto marketers also are developing more of their own events. Lincoln-Mercury created the Mercury Cycling Team to court younger consumers. Races are tied to local dealers, with activities, displays, and test drives at the finish line. “Dealers have really latched onto this,” says Stephen Zammarchi, exec vp-managing director of Wunderman Cato Johnson, Chicago, which handles events for Lincoln-Mercury. “People don’t have the time or inclination to go to a dealership anymore, so we bring the dealership to them through events that are an extension of their lifestyle.”

Mercury also launched Cyber Cafe this year, a traveling van that carries PCs to link consumers with Mercury’s Web site for virtual test drives, or to build and price car from scratch. The upscale Lincoln division sponsored the Aspen Wine & Food Festival, a weeklong summer event that draws upscale consumers of all ages.

“We’re looking for events like this that are lifestyle-driven. They’re about attitude, not age,” Zammarchi says.

Cadillac also began its own mountain-biking team this year to promote Catera to younger consumers, especially import owners. That, coupled with Cadillac’s Senior PGA tie-ins and sponsorship of players on the Nuveen Tennis Tour, “hits consumers at various points in their life,” says Steven Rosenblum, Cadillac director of advertising.

The company is courting younger buyers more aggressively than even Rosenblum realized. Shopping at a Chicago-area mall, he was surprised to find a display of Cadillacs and young reps pitching the cars to passers by. “This woman wouldn’t believe that I was the director of advertising – she kept trying to sell me a car,” he laughs. “I had to pull out my business card to convince her.”

In August, Cadillac launched “Cadillac Vision,” a glossy lifestyle quarterly mailed to 400,000 current owners via Hachette Publications, New York. The company also extended a summer direct-mail campaign for DeVille after getting a 25 percent response rate from owners. A letter from dealers offered a free oil change when consumers take a test drive; a separate mail-in offer gave away Cadillac golf umbrellas.

A prospecting campaign for Seville targeted import owners with a mailing and videotape that compared Seville directly with import brands, and offered an extended test drive, with a car delivered to the shopper’s home, and high-end premiums. Draft Worldwide, Chicago, handles Cadillac direct marketing.

Chrysler is stepping up promotions to maintain its current owner base. This year it sponsored Chrysler Night at three Six Flags parks, buying out each park for the night. Mailings invited current owners to visit the local dealer and pick up four free tickets to the park. Cars are on display and available for test drives, and fans can pose in a Prowler with a Warner Bros. character. In all, Chrysler will host 30,000 to 35,000 owners and families. “We gauge [mailings] for a conservative number of people in the park,” says Jeff Hartley, licensing and event marketing manager. “We don’t want people to feel like they’re in a crowd. We want them to feel like Chrysler is doing something nice for them.”

Chrysler’s crown jewel of events, Camp Jeep, drew 12,000 to Vail, CO, for a week of camping, driving, cooking demos from Martha Stewart Living, the ’99 Grand Cherokee unveiling, and that Loggins & Bitonti concert. Jeep is scouting locations in the East for ’99, and may do a few short sessions instead of one long one. “We don’t want a huge crowd,” says Bitonti, who figures he could host 10,000 Easterners over two weekends. “We want more opportunity to sit and talk with owners.” Feedback has driven Camp Jeep’s evolution since its 1994 debut. When owners asked Chrysler to bring its Jeep 101 off-road driving course to their towns, Jeep traveled to 1/2ve markets in ’97, and 20 markets this year. Now it’s testing locations for clinics for women, police forces, and other groups. Such events “make the vehicle the hero and let us talk with consumers in a non-intrusive, non-sales environment,” Bitonti says.

Retail re-scaled The sales environment itself ain’t what it used to be. With Internet sales on the rise and national mega-chains like AutoMax growing – and mulling overprivate-label cars – the Big Three are reevaluating their dealership networks an d testing retail showcases that could become strong promotion venues.

Ford has persuaded dealers in Salt Lake City to pool their efforts behind Ford Retail Network superstores that sell all Ford, Lincoln, Mercury, Mazda, and Jaguar models. Ford reportedly plans to establish superstores in 10 cities by year-end.

GM’s “site-based marketing initiatives” have put cars on display in movie theaters, theme parks, and toy stores. The goal is “to get our products in places where people go,” says GM spokeswoman Donna Fontana. GM cars set the retro-Detroit design motif for Sony’s Star Showcase movie complex in suburban Detroit, where patrons park in the Buick or Pontiac sections and stroll among historic GM artifacts and new cars on display in the lobby. FAO Schwarz plans to open a GM Body Shop in its flagship New York store, selling GM toys like a model of the Envoy sport utility vehicle bowing this fall. (GM supports Envoy’s intro with a Blue Note Records tie-in that gives away customized CDs with Envoy test drives. Dealers play Blue Note tunes in the vehicle during test drives.) GM’s long-running alliance with Disney got a facelift at Epcot Center when GM’s Test Track replaced its World of Motion attraction.

Chrysler presents a spit-polished image in its Great Cars, Great Trucks showroom in Mall of America near Minneapolis. Shoppers can play with race simulators, sit in a Prowler or Viper, locate a dealer by computer, and buy Chrysler merchandise.

Of course, it’s tough to beat Bitonti’s showcase locale in the Rocky Mountains. Cars are a lifestyle thing, after all.

The chance of winning a New Beetle in a sweepstakes or raffle this year is greater than the chance of being struck by lightning.

Volkswagen had nothing to do with it.

Marketers beat a path to Volkswagen of America’s door asking permission to offer Beetles as prizes, riding the coattails of the high-profile re-launch. VW provided photography and reviewed storyboards, but said no to joint promotions.

“VW doesn’t condone sweepstakes as a method of building our brand,” says Liz Vanzura, director of marketing. “We’re flattered by the attention, but companies are doing it on their own. They think the popularity of the product is good for their brands’ image.”

And how. VW sold 32,450 Beetles from January through August, nearly one-quarter of its total new-car sales of 152,345, up 61 percent from 1997. (There’s no break-out of how many were bought by pizza restaurants for deliveries.)

Even McDonald’s hitched a ride with the Bug, giving away a 1968 and a ’98 Beetle as part of its mid-September “Get Back with Big Mac” promotion. The “then-and-now” tone of McDonald’s campaign made it palatable to VW, whose execs make sure the Beetle is shown in a contemporary setting in other marketers’ campaigns. “We’re avoiding a really retro look in our own campaign,” and wants others to portray the Bug the same way, says Vanzura. VW massaged a few storyboards that showed the Beetle surrounded by flowers, “a real 60s setting,” she says. “Bigger brands understand brand integrity and won’t disparage [other marketers’] products.”

Still, some tie-ins took Vanzura by surprise, like the package of Perdue Chicken with a Beetle on the label. “I’m not sure what their connection is with our brand, but there it was,” she says. VW didn’t pursue it with Perdue, although the company does take an active stance if the Beetle is shown “in disparaging situations,” including alcohol or tobacco campaigns. So far, no one’s gone forward with a campaign that VW frowned on.

In its own driver’s seat VW did run two of its own national promos to launch Beetle, sponsoring the Winter Extreme Games in January and Lilith Fair through summer. The Beetle was on display in Crested Butte, MT, during the Games, and given to the athlete voted Most Extreme at the end. “It was a great venue to position the Beetle as a young, high-energy car,” Vanzura says. A sweepstakes at Lilith Fair concerts raised money for the National Breast Cancer Fund, and gave away one Beetle at the end of the tour. The car was on display at all concert venues, where sunflowers were given to concertgoers. “It was a grassroots way to let younger consumers see the car in a natural, non-threatening venue,” Vanzura says.

Like anyone could find such a cute car threatening.

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