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
