The Nissan Brand Message Is 'Let's Make A Deal'
Nissan is currently seeking a new CEO. With Carlos Ghosn still awaiting trial, and his successor, Hiroto Saikawa, was abruptly fired. The corporation is being guided by an interim CEO during a time of upheaval
Observers point out that the magnitude and the breadth of the problems facing the Corporation far outweigh where it was 20 years ago. The automotive industry is in the throes of several sea changes, forcing most of the big brands to rejigger or replace strategies, as well as put resources into a variety of new mobility options.
In addition to industry uncertainty, Nissan’s most profitable marketplace, the US, is vastly underperforming. According to Automotive News, U.S. sales through July 2019, fell 7.8%. Accordingly, 30% of U.S. dealerships are hemorrhaging cash while another 10% are barely breaking even. The Nissan brand is in the challenging situation of management upheaval, industry uncertainty and brand jeopardy.
The Nissan brand, which had been resuscitated during the first three-year Nissan Revival Plan (NRP, announced in 1999), has devolved back to being perceived as a cheap, incentive-laden brand, according to various press reports. As one dealer bemoaned, Nissan is where Kia used to be in terms of brand perceptions… the value brand. Fixing the Nissan brand will be one of the new CEO’s biggest tasks. It will not be an easy mission. Lowering the average price of the car and continually buying market share with deals has set the brand back 20 years.
Very early in the first NRP (Nissan Revival Plan), BusinessWeek International reported on an interview with Mr. Ghosn. Mr. Ghosn commented that a Nissan customer would need an incentive of US $1300 just to consider a Nissan purchase. The Nissan brand image was so impaired that the brand was at a significant price disadvantage.
One of the strategic brand priorities of the NRP was the reduction of incentives. At that time, Nissan could only sell vehicles by offering prices lower than competitors: potential buyers expected steep discounts.
Excessive emphasis on deals builds deal loyalty rather than real loyalty. Buyers become loyal to the deal, not to the brand. Deal loyalists are brand indifferent. They go to where the deal is best rather than buying the best brand. Deal loyalists do not see any value in the in the Nissan brand.
Generating sales based solely on deals actually increased price sensitivity, which had to be addressed with even more deals, which increased price sensitivity, which required more deals. The result is a death spiral of promotion addiction.
The “let’s make a deal” approach is death-knell, deleterious marketing. Deal loyalty demolishes brand value. Constantly offering deals extracts value from the brand, weakening it over time. The more deals, the more price sensitive the customer; the more price sensitive the customer, the more frequent the deal discounts need to be. Eventually, the brand is always on deal. Fixing the brand will mean turning the current price sensitive customer into a brand sensitive customer.
Of course, promotions and price deals can generate traffic. Deals are appropriate for such marketing goals as attracting new customers, re-attracting lapsed users, encouraging trial of a new offer. But, living with dealing as the only marketing approach creates customers who will leave the brand the minute another brand has a better deal.
It is imperative that whoever takes the reins at Nissan has brand building as a strategic priority. The first-step is to top the hemorrhaging of the customer base. Shore up the core. Stop the bleeding. Make sure the brand promise is relevant, differentiated and trustworthy. True customer insights will be essential. Dealers say they want more advertising. Increasing marketing spend to create more advertising around a brand that has a damaged image will only increase these negative perceptions. The brand needs a coherent, consistent, trustworthy, relevantly differentiated message before money is spent on ads.
Brand building also means that everyone in the organization, regardless of function and including dealers, lives the revitalized brand promise day-in and day-out. And, that everyone has a responsibility for the integrity and strength of the brand.
New vehicle models will help. New products make marketing news. New products attract brand interest. But, discounts and deals will also have an important role in creating brand consideration. But, revitalizing the Nissan brand is the strategic imperative. If potential buyers believe the brand is not worth the money, time and effort, all the new models in the world will not help. “Let’s make a deal,” as the only marketing tactic is destined to fail.This post has been edited by EnergyAnalyst: Sep 29 2019, 11:52 AM