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The Auto Industry’s Bad Branding – a Lesson for Radio

A No-Nonsense Marketing Smart Tip January 4, 2007

You can learn a lot about branding – good and bad – from the auto industry, and Charlie Hughes should know. He’s the founder and former CEO of Range Rover of North America. He has worked for six different automakers on eleven different brands and was also CEO of Mazda.

Charlie heads the marketing consultancy Brand Rules and is the co-author of Branding Iron: Branding Lessons from the Meltdown of the US Auto Industry

. Given the importance of a vital auto industry to the health of the radio industry, Charlie’s got a message for us all.

Listen to the full 15-minute audio interview (what follows is only an abbreviated transcript).

There’s quite a bit in your book that’s really critical of Detroit’s automakers. In a nutshell, what went wrong and what can we learn from it?

It is my belief that the Detroit automakers failed to realize a rather dramatic shift in the world, and that shift is the fact that virtually every market now is over-served. There are too many car brands. The most important job is to set yourself apart.

Revenue becomes king. Unfortunately, the automakers still see themselves primarily as manufacturing companies and they are most comfortable spending time on the expense side of the equation. Of course, worrying about expenses is necessary. It’s like breathing. You’re not going to live you if you don’t breathe. But it doesn’t bring you success. It’s just a necessary function. So understand that setting yourself apart in this world is job number one.

Second, you need a firm grasp of who you are. It seems kind of amazing, but the industry itself hasn’t agreed on the definition of “brand.” I define a brand as a promise wrapped in an experience. It’s based on the simple premise that in an over-branded world, before you can expand out you really have to stand for something. And that’s the “promise.”

The best promises are clear, compelling, and show that you are committed. They are also personal. There are promises from you as a company to individual buyers. And, of course, the companies that succeed keep those promises.

Third, the brands that succeed are those that have the most focus. Toyota is everybody’s poster child for being the most outstanding automotive brand. They are swimming in cash, if you believe them, of almost $40 billion. They could buy General Motors outright. But they wake up every morning and worry about one thing – the Toyota brand and beating other people in the marketplace with Toyota. It is that kind of focus thatleads to their success.

The companies that get into a lot of trouble, and General Motors and Ford are certainly two good examples, all seem to have too many brands, more brands than anybody could possibly concentrate on. And they talk with wild optimism about synergies and how we can share platforms and how the public won’t notice. Well, guess what? The public does notice.

One of the key points we make is that branding is not marketing. Branding is a business strategy. The alternative to that basic strategy is to sell on price – as a generic or a commodity, and that is not a winning strategy. But if you walk down the brand strategy path, then that strategy has to permeate everything you do. It is not a badge you put on at the end of the assembly line. It’s not an ad slogan. It is who you are, right down to your socks. And it has to permeate everything you do.

You say the most exciting new products get the most press and media coverage. If that’s true, then why aren’t there are exciting new products?

Well, I think one of the big issues in the car business is there are all these conventional wisdoms that are around, like “product is king.” But if Detroit really believes that, then why do so many cars come out looking exactly the same? It is because you end up with a committee approach to building cars and people who do not really understand the marketplace and are not going to take risks. They dummy-down the things that they’re doing.

Detroit and its dealerships are a huge radio advertising category. If you owned a group of radio stations right now, what would you worry about?

Because of the decline in market share of the Detroit brands, Detroit now is sitting with too many car dealers. An awful lot of money coming to radio stations comes through both dealer ad groups and individual dealers as well. So there’s going to be a period where the number of domestic dealers is going to have to decline. That in and of itself may not be bad because many of the dealers who are going to be weeded out are the ones who probably don’t spend a huge amount of money on advertising anyway because they’re just not generating enough revenue and critical mass to do so. But that will have some relative displacing effect on local media. In that regard, I would certainly be trying to support the strong players in my market in any way I could.

Also, Detroit is trying an awful lot of nontraditional media. To the degree that they can wean themselves off heavy, heavy discounting and go to more brand-building marketing exercises, that may put a strain on radio as well. You see, radio’s going to have to work to get past the image of being very good on short-term promotion and price advertising and demonstrate that it’s a good tool in the arsenal of building brands.

What about what’s in the dash? As you know, radio has competition nowadays from iPod jacks and satellite radio and even the coming of HD radio. Where do you see that whole thing going?

We have put customers in control and they like it. You like it in your personal life. I like it in my personal life. I have an iPod, you have an iPod, everybody has an iPod – and there are times when I want to listen to the music I want to listen to. And frankly, there are other times when I don’t want to be bothered with all that and I do want to tune into my favorite radio station.

What about HD radio? When the radio was basically the only choice in a car – AM or FM or whatever – then advancements in radio technology could play an important role. If you look at the car companies today, they’ve had to engineer the cars to be compatible with iPods. They’ve had to re-engineer their tuners so that they could either carry XM or Sirius. I’m afraid in some respects the technology has sort of diminished the importance of HD radio. Again, though, because it’s a dogfight, you’re fighting for attention both with consumers and also with the manufacturers. I’d be fighting like crazy to make sure that HD radio gets promoted to the car industry so that they start installing the technology. In the past, the auto industry would pick up on these things automatically because they had limited choice. Not any more.

What about the Internet in cars and its ability to deliver audio?

You’re still going to see an awful lot of stuff creep in, but you may see it creep in through XM and Sirius, not through Detroit itself. The first example of this now would be the real time navigation system. The promise is that you could be driving around in your car and want a stock quote on Ford, or tell me what the score is in the Yankee-Boston Red Sox game, or I’m flying to Atlanta, is my flight on time? What’s the weather in Atlanta, anyway? All that now is technically doable.

For satellite radio, most of the smart money says that the radio part of it is at most the “camel in the tent.” The bigger game is in all of the possibilities for information being pumped into the car.

And when do you think we’re going to see that information pumped into cars in a big way?

I don’t really have a good answer for you on that. But I will tell you that it is one of those areas of life which will be insidious because once we experience it, we’re going to want more of it. And that gets back to the idea of empowering customers and giving them what they want when they want it.

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