Friday, January 16, 2009

Do You Have Too Many "Cars" In Your Product Line?

Can you guess how many car and truck models are sold by General Motors, Ford, and Chrysler? According to a recent New York Times article, there are 112 models spread out among 15 brands in the United States.

On the other hand, Toyota, Honda, and Nissan - the top three import automakers - have about half as many options with 58 models and only seven brands.

When the vehicle market was thriving, the automaker's strategy was to create a car for every price range and every purpose. This glut of product options is one of the main reasons American car companies are losing so much money. Vehicle sales have slumped to their lowest point in 15 years.

Now, with high gas prices and an economic recession, the car makers are suffering. Two things they should have proactively done a long time ago: 1) Work toward creating more energy efficient and environmentally friendly vehicles. 2) Weed out the redundant models with low sales and concentrate on the strong models.

How can you, as a marketer, learn from what's happening to the auto industry and apply it to your marketing programs? Here are some points to consider:

Focus on your core products and services.
As a marketing professional, decisions about your company's product and service offering may be beyond your control. However, if you do have a say in your product mix, now is the time to evaluate the performance and usefulness of each product or service. Are there less successful products you can eliminate? Do you have products that overlap each other in features and benefits? For instance, GM dropped the Oldsmobile brand because models were so similar to Buick and Pontiac.

Weed out lagging marketing programs.
Along the same lines as cutting the under-performing car models, you may want to think about dropping any lagging marketing programs. Do you have marketing programs that are only breaking even? Or could you eliminate a portion of a program? For example, automakers are finding that credit card rewards programs are not as successful as in past years. Consumers have become less brand loyal and many are keeping vehicles longer before trading. Now is the time to consider other ways to promote brand loyalty.

Narrow your message.
During uncertain economic times, it's more important than ever to make sure you're conveying a focused and compelling message. You need to speak to the concerns and motives of your customers and prospects. Consumers are more interested in making purchases they need and can justify, rather than feeling like they are buying frivolous or excessive items. For instance, in recent years automakers have promoted brands as being status symbols or "having the biggest SUV on the block." A more updated message might focus on "being more environmentally conscious" or "a good value for your family's needs."

Consider your tone.
You may want to consider a more serious, comforting tone. Rather than making extreme, emotional claims, it's time for a rational, sincere approach. While car makers used to make extreme fantasy claims about a racy car or powerful truck transforming the life of the owner, now they're realizing the need to focus on value, safety, gas mileage, and overall performance.

Be proactive and try something new.
Once you weed out the unproductive products or marketing programs, it's time to think about doing something new. Automakers are reactive rather than proactive. They are finally reacting to the fact that Americans no longer want hundreds of mediocre car models and would be happier with fewer, more interesting models. Automakers are also realizing that consumers want more fuel efficient, affordable vehicles. Think about what you can do to offer something new and better for your customers.

As people switch from rampant spending to more considered purchases, you can modify your products, services or messages to meet their needs.