Re: marketing

[James Bratek <james_bratek@domain.elided>]

Charlie,

You and I have dabbled in market analysis in the past, so I'm surprised
you've raised more unanswered questions than answers in your most recent
message.

I'm not privy to market analysis studies (I assume each manufacturer
conducts and documents such studies annually, but for obvious reasons does
not publish them for public consumption) but I'm savvy enough from my wide
coverage of journal readings and personal observations to draw some
intelligent conclusions.

The following statements apply to the U.S. marketplace.

Consumers of luxury brands associate themselves by image, both perceived and
real. The majority of this phenomenon is influenced by peer aspiration,
while a smaller niche market segment boldly exercises their individual
tastes without considering image perception. For example, most doctors and
lawyers desire Mercedes, BMWs, and Porsches because their peers and
colleagues all drive one. But within that group, there will probably be a
few who could care less about what others drive, and instead select a
vehicle that serves them best, whether that be a Mercedes or Alfa or Acura
or Lincoln.

U.S. consumers are definitely more conscious of image than performance when
compared with European consumers. Why else would Acura, Infiniti and Lexus
only exist here in the U.S. and as Honda, Nissan and Toyota elsewhere? Many
analysts are eager to see the outcome of Volkswagen's ventures into the
premium segments ($40,000+) because the image of VW is still defined by
yesterday's Beetle and MicroBus and today's Golf/Jetta models, not luxury
models competing with Mercedes & BMW flagships. The prediction is that VW
will fail, selling fewer than expected units of these luxury models, but the
wildcard is a successful marketing campaign that would transform the
hip-family-car image into a hip-luxury-car image. VW has turned itself once
around already recently, so I give them a 50-50 chance they can pull another
surprise out of their bag of tricks.

Exclusivity and cost are generally proportional, so the more expensive a
product, the more exclusive it becomes. However, there are exceptions if you
include limited production under the defining umbrella. The VW Corrado was
exclusive and sold for $20,000-$25,000. The 1991 Lotus Elan was around
$30,000 I believe. The trouble with these examples and other low-price
models is that they "failed" to achieve high sales volume and were
discontinued because of that failure. High-priced models don't suffer from
that high volume expectation and are conceived as "halo" cars to increase
showroom traffic towards more affordable models in the lineup. So while
Acura would love for everyone to buy an NSX, they are quite happy if you
walk out of the dealership with an RSX instead, and they keep producing the
NSX knowing it drives some people into the showroom in the first place.
Also, pricing Alfas in the Saab tier will maintain the "poor man's Ferrari"
image to some who live by the "you get what you pay for" motto. Even some
car magazines have described the new $90,000 Maseratis as a poor man's
Ferrari! As long as there is something more expensive, you'll always be a
target, I guess.

Rap stars buy ANYTHING that is the "best" or "top-of-the-line". Their hobby
seems to be with cars, so their favorites are Bentleys (any), Ferraris
(any), Lamborghinis (any), Maseratis (any), Porsches (911 Turbo and
Cabriolet; no Boxsters please!), Aston Martins (any), Jaguars (XKR),
Mercedes (S600, S55, SL600, SL55, CLK55 Cabriolet, E55, ML55) BMW (750iL,
Z8, M3, M5, X5 4.6is), Land Rover (Range Rover only), Lexus (SC430, LS430,
GS430) to name most that come to my mind. As of today, Alfa Romeo has an
image similar to Saab, that being mostly yuppie white caucasian so I can't
imagine any current-model-year Alfa being lowered, chromed, and window
tinted to appeal to rappers. If Alfa began a successful run of production
cars here in the U.S. by the end of the decade, you might very well see
rappers turn onto them, but certainly modified, never stock. The general
rule that I observe: if it's under $100,000, modify it. Anything over that
price is acceptable to keep stock, especially a Ferrari or Lamborghini,
however a "killer" sound system is a must-have mod. Rappers mod their cars
only for distinctive looks since they mostly cruise the boulevards and
party/club circuits with them, and any of these cars in stock trim is more
than fast enough for them. A shame that these high-priced high-performance
cars become nothing but status symbols for their owners, never exploring the
driving objectives the cars were engineered and intended for. And when they
hit back into the resale market, they are tainted examples to stay away
from.

Young people may define pop culture but there has always been a gap between
those that live it everyday and those that experience an occasional taste
of it (splurging on a night at a club or vacation) and fantasize about it
the rest of the time. Despite the economic downturn, there are still some
20- and 30-somethings that can afford the good life. No one expects an Alfa
Romeo to be your first car (that's for Hyundai, Honda, Toyota, Nissan, VW,
Ford) but there are certainly enough 25-to-35 year olds who hold prosperous
careers in the big cities to afford $30,000-$40,000 cars, especially on
lease programs.

From a marketing standpoint, Alfa is ripe with potential: Italian origin and
history, legendary motorsports achievements including Enzo Ferrari as a
factory employee/driver and 155/156 racing heritage, pop culture references
(Dustin Hoffman/The Graduate), beautiful bodywork past & present,
intoxicating engine sounds, etc. Think about how Ralph Lauren markets his
brand (associations with the "good life" such as yachting, polo matches,
golfing, classic European cars) and Alfa Romeo fits right in. All it would
take is the right ad agency or internal marketing department to pull these
ideas together into a smart campaign to re-launch the brand in '05.



Jim


> Right now, poor Alfa in the USA is more like (please forgive me, Joe Elliot)
> some forlorn piece of junk that is rusting away on a used car lot of junk
> yard, that you can buy very cheap if you are willing to put up with holding
> it together in the face of its being orphaned, like a CRX for the young and
> poor student maschochist set.  I mean, how many people (a number greater than
> one?) go through years of dental school and open a practice with the dream of
> going out and buying a new Alfa?  V BMW?  V Lexus?  V, even, Mercedes?
> 
> You have to make it something worth WANTING as well as something worth
> buying.
> 
> In the past, they did a bang-up job of neither.  Why is an open question, but
> past history in any event.
> 
> Perhaps someone should do a study (o dig out the ones already done) that
> compare the buying habits in NA to those in, for example, Europe.  What
> combination of factors makes someone consider, look, and then spring for it?
> Are Euro buyers more knowledgeable than US buyers?  Are US consumers more
> conscious of image than performance?
> 
> Does exclusivity have to do, well, exclusively, with cost in the USA?
> 
> Who sets the wheels in motion: the older people who can afford something like
> an Alfa, or the younger people who can't but who set the style?
> 
> Why would a rap star buy a purple Diablo or a black Range Rover?  Would the
> same kind of character buy an Alfa?  A Ferrari?
> 
> What does the car say about the consumer and what does the consumer say about
> the car?
> 
> Charlie
> LA, CA, USA
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