BMW MINI and Sales Promotion

In the NY Times article “Marshmallows and Public Policy” David Brooks describes a research project about the consequences of instant gratification. Children are offered the option between having one marshmallow immediately or two if they wait for a while first. It was the latter group that performed significantly better in their life later on. The article thus discusses the fundamental role of self-control and delayed gratification for a person’s favorable development and success.

At the same token, it can be argued that these values are of fundamental importance for the victory of any brand- often short-term gains must be sacrificed for long-term viability. While often being evaluated on quick results- often in quarterly reports- maintaining self-control is therefore the biggest challenge of the CMO. This need becomes particularly relevant regarding the concepts of brand extensions as well as sales promotions. I recently worked on a college project about the BMW Mini and would like to apply this concept to this example.

The need to engage in sales promotion remains the biggest threat for the long-term proposition of marketing. Already during introduction the average car brand faces the risk of falling into this trap. There are overlapping categories and hundreds of models- too many to conveniently fit into the mind of a consumer. The two major American car manufacturers- GM and Ford- try to launch every car model imaginable, eliminating the importance of well-differentiated brand in the decision making process. The cluttered environment resembles the dilemma of an average CPG brand in a retail store, resulting in the need to attract the attention of the increasingly price-conscious consumer. In that context, as it turned out, it was the need of instant gratification of GM that led to its decline. More than 55% of Automobile ads in Print were for Sales Promotion during 2008. The consumer is getting used to the rebates and increasingly wouldn’t even consider purchasing a car at full price.

Fortunately, upon its introduction in2001, the Mini could avoid these startup problems. First of all, by opening up a new car category, the consumer did not yet have a precise price frame of reference. More emphasis has been placed on the brand, while the Mini marketing did its best to maintain it like that. And secondly, selling predominantly through its own dealerships provides control as well as the possibility to abstain from any sort of trade oriented sales promotion. The initial sales objectives have been set intentionally low at 20,000 units for the first year, so that sales promotion efforts became superfluous. The company did not want to over saturate the US market and rather establish an aura of exclusivity through scarcity- a dream for all CMOs to live up to their sublime aspiration to delay gratification.

Nevertheless, as a result of the maturing market environment as well as the influence of the recession on new car purchases, the Mini is currently reaching a slowdown of it rapid growth. Sales promotion suddenly becomes a viable option again, due the requirement of defending market share and reaching new markets. In the past, the company had a unique approach: market to the owners, not potential mini buyers, hoping that a strengthened community would itself go out and proselytize others to the brand. However, in these times further incentives to attract nonusers could be essential to keep sales figures up- sales promotion as classical acceleration tool. It is hereby important to not risk any of equity. Mini needs to carefully complement the promotional efforts into its Marketing communication program and brand mantra in order to achieve franchise-building effects. For current drivers and prospects, to strengthen its community and provided incentives, Mini could for instance continue organizing contests and sweepstakes with prices such as a mini road trip through England and France. For prospective buyers, with regard to the economic situation, promoting leasing fares could be powerful to provide incentives. Value adding premiums such as offering a classy British-style navigation system in cars or unexpected service supplements also seem imaginable.

To sum up, with marketing being a long-term proposition, brand managers often are severely challenged to exert delayed gratification in their programs. Ever changing, uncontrollable market environments sometimes require to slightly deviate from their natural stance to practice self-control, but- when exerted with care- even short-term promotional programs can keep the dream of building brand equity alive.

Francesco Wesel
Integrated Marketing Communication
www.francescowesel.com

CEO vs CMO

I recently read an article by Lloyd Truffelman titled "Blame CMO turnover on metrics mania" (originally published on June 18 edition of AdAge).

As markets, the media landscape and consumers are becoming more and more diverse, a strategic approach to marketing is fundamental. Undoubtedly, marketing and communication needs facts as a solid basis in order to be tailored to specific market segments and choose appropriate mediums from a wide variety of media channels if it wants to be successful.

Nevertheless, times have changed, making it difficult for traditional marketing difficult to be realized. The initial pure informational marketing efforts did not survive the constant social developments of time. An growing partial attention of the consumer due to the abundance of available channels, as well as an overflow of communication messages have created new challenges for the entire industry. It has become increasingly difficult for marketers to capture the attention of the audience, which is why creativity is has long been a buzz word in the industry. The common belief has been that marketing and communication needs to be creative, new and original in order to be successful. Consequently, while having a strong strategic fundament, today’s marketing needs to be of an entertaining or interactive nature and at the same time offer a strong emotional appeal.

In that context, it needs to be highlighted that marketing is not a battle of products, but a battle of perception, which often forms the major discrepancy between the mindset of a CEO and a CMO. People believe what they want to believe; and see what they want to see. Truth is illusive, making it impossible for marketers to change a consumers mind even if rational facts show promising focus points for their brands. Even though “fast” might be the major DMU to prefer one fast food chain over another, Burger King cannot use it as a central theme in it’s communication, as in the mind of the consumer the word is owned by McDonalds. Management however often focuses on facts, because they believe in objective reality. It is then of course easier to believe that truth is on their side. Armies of researchers are employed, focus groups conducted, questionnaires tabulated and what comes back in a two pound report is often a wish list of what consumers want. But if brands go after everything, they might risk standing for nothing. No two companies can own the same positioning in the mind of the consumer. It is therefore much more complex, involving a combination of issues and trends of the market and consumer environment with one’s own brand mantra. And that largely involves the intuition, the gut feeling of the CMO, in order to come up with a creatively original execution.

As the Trufelmans article rightfully points out, an “overreliance on metrics” can “crush creativity”. This pattern holds true for battles between general management and the CMO as for interagency dissension between –for instance- account planners and creatives. The big challenge therefore often consists of finding the right balance between strategy and creativity. If marketing was indeed like Jazz music, the musician would have to ensure that his music is unique and new, while being in line with the contemporary taste of the listener as well as general music market trends, in order to be successful.

Undoubtedly, a consequence from these constraints on the CMO is that companies often try to "communicate" when they should actually be trying to "position." And in today's over communicated society, it takes endless repetition to achieve this effect. For instance, as Al Ries repeatedly exemplifies in his columns, the BMW might not be the most fun car to drive, but with their consistent claim of “the ultimate driving machine” they have anchored the "driving" position in the mind. For a typical consumer brand to come to this point, that might mean years and years of advertising and hundreds of millions of dollars. Most companies don't have the money, vision and patience to do that and if immediate results are not visible, the marketing department is usually the first one to blame. Consequently, companies jump from one message to another, hoping for an eventual magic pick that will energize their brands. However, this approach does not work today. It appears as if Pepsi changes their logo, marketing messages and slogan continuously and with that never succeeded in surpassing “the real thing” Coca-Cola. The only thing that works today is the BMW approach of strict consistency. Integrated marketing Communication means not only a synergy of different marketing tools but also to have a brand with a common sound, look and feel over time. And that simply is not possible with an average CMO tenure lasting only 26 months. Marketing Managers need time, trust and creative freedom to achieve enduring success and strategic advantage in the market place.

For another interesting perspective on the subject, note this podcast episode of "The Ries Report" by Laura Ries:

Francesco Wesel MA
Integrated Marketing Communication
www.francescowesel.com
www.brandnewtimes.blogspot.com