25 Jun 2010
The grapevine has it that Indus is producing a staggering 190 Corollas daily and still can’t meet the market demand. And remember this is still the recession when consumers are historically hesitant to part with their hard-earned dough. The premium or ‘on’ amount for Corolla is in excess of Rs.70,000+ compared to other brands many of which you can have without giving a single paisa for ‘on’.
To be fair to Honda, they did come up with a stylish City whose front was akin to Accord, precisely what the consumers liked to see. But it didn’t work out the way Honda intended to do. There were two major reasons:
One is the pervasive false notion, ‘We have a great product, and it will sell by itself.’ If that were the case, why would celebrity brands like Pepsi and Coke still be spending billions of dollars on marketing? Why would Unilever be spending a fortune on Lux Style Awards? Why would Toyota launch an aggressive campaign for the new Corolla in spite of the fact that the old model was doing good?
‘Marketing is the battle of perceptions, not products’. Al-Ries
The best Honda did was launch a subdued print campaign and a direct marketing campaign, which by the looks of the sales figures didn’t do much good.
The second equally criminal reason was to do with a number of smaller glitches that combined to create one big negative impact. This included the look of its backlights, the sort of a pentagonal shape that consumers just didn’t like. A consumer survey beforehand would have rectified this problem in the design stage. Another glitch was the quality of the buttons used on the dashboard. A Honda fanatic fan alleged that the quality of the onboard panel was no better than the Chinese SUV brand GoNow.
If you just look at the sales comparison of Honda City and Toyota Corolla for the month of July last year and the one previous to it, you couldn’t help but gape at the yawning gap between the results of the two. In 2008 in the month of July, City sales were 625 when the old model was still there and last July the sales increased to just 686, a mere 10% growth. Even if you include the Civic sales for the sake of equivalent comparison since Corolla is the equivalent of both City and Civic, the total Honda sales went up from 1025 to 1140, a 10% growth.
Coming to Corolla, sale was a mere 298 in July 2008, last year July it rocketed to 3,124 units, that’s a staggering 948% increase in sales! (All sales figures are courtesy PAMA).
The last two years’ sales have been analyzed because they present a clearer picture of the before-and-after difference between the launch of the new models.
Such stellar sales performance is unprecedented in the history of automobile industry in Pakistan. Do you really think this unbelievable gap is due to the difference in quality and performance of Corolla and City?
Do you really think that Corolla is that much better to drive than City or Civic for that matter? Even if it is (though I doubt it would be), is there a mammoth 948% difference between the two?
No. Not by a long shot. It all lies in the perception in the mind of the consumer. And the brutal truth is that Toyota was better able to influence the consumer with its marketing effort. The amazing thing is, all this happened without the consumer even test-driving the brand, they were that much awed by the branding communication. Honda on the other hand gave ample opportunities to test-drive the new City and yet the sales didn’t pick up as much as was expected. This real-world example again lends credibility to the adage coined by the venerable Al Ries:
‘Marketing is the battle of perceptions, not products’.
And remember that the new Toyota launch campaign is not a great one by any stretch of the imagination. This just goes on to show how poorly its competitors are faring at marketing their cars.
Toyota has communicated its brand positioning in every Tom, Dick and Harry publication. The other day I received a magazine called Slogan I didn’t even know existed – and right at the back cover is the new Corolla in all its glory. To Toyota’s credit, they have inculcated all the three elements of the Brand Value Pyramid (proposed by Scott) – features, benefits and values. And one of the features is that it is ‘Ipod Ready’! Pretty impressive.
On the radio, they targeted the upscale albeit young segment by sponsoring the Evening Drive Show on CityFM89 and offering tickets to the Cold Play concert in Dubai as prize for those answering a couple of audaciously simple questions. It can be said that the sort of people who actually listen to Cold Play are predominantly the youth segment which hardly qualifies as target material for Toyota. It is thus no surprise that the winner was a young bloke who although would be grateful to the Toyota people for giving him such a fantastic experience, doubt would be rushing to the nearest Toyota dealer to get his hands on the new Corolla. He just doesn’t have the wallet for it. It’s basic consumer behavior fallacy- trying to target those who desire your brand but can’t afford it.
Then there’s a positive review of the car by Umair Mohsin published in AutoMark magazine. Whether that positive review about Corolla is independent or sponsored by Corolla is not known, but this much is known that Toyota did provide the car to the reviewer (the Altis Cruisetronic) for testing purpose.
Remember that whatever has been discussed is entirely based on the positioning of the two brands. No stock has been taken of the actual performance of these two brands – the ‘driveability’ of them. Why Toyota is preferred in rural areas. Is it because its body is almost one foot higher from the ground while Honda is much lower, or is it because the off-road grip of Toyota is better than Honda? All this has happened without the consumer taking into account the flat floor of Corolla at the back due to redesign of the torsion beam or the improved ability of Corolla to stabilize after passing over a pot hole or to maneuver around corners.
There’s also the general perception that the Pakistani consumer prefers the aerodynamic shape more than any other feature. While a segment of the market may prefer that, it’s hard to believe that the overwhelming majority values that feature the most. If that were the case, wouldn’t Kia’s Spectra be selling like hot cakes by now? That car had the sleekest aerodynamic design until Civic Reborn came along. Unfortunately for Dewan Motors, that was the only worthwhile similarity Spectra had with Reborn.
Honda City is sleeker than Toyota Corolla and yet Honda has been unable to command a price premium over it. Delving into the intricacies of the design aspect requires another in-depth article.
Coming to the SUV line extension of the two brands, even here Toyota has done much better by aggressively promoting its rather extensive line of sub-brands, from Terios to Prado to Hi-lux to the new Fortuner. Compared to Toyota’s arsenal, Honda has just one SUV in the region – CR-V, and you would be hard pressed to find the car either in the world of advertising or in the real world as far as Pakistan is concerned. Pakistanis can take a leaf out of their Indian counterparts notebook with regard to their shrewd strategy of placing the Honda CRV in the movie ‘Wake Up Sid’. It’s not a new strategy by any stretch of the imagination as Hollywood has been indulging in these sort of tactics since time immemorial, but they are still effective. What was so admirable about this particular instance was that the car was used by the lead character in having the time of his life along with his friends. What’s more, the character is played by the latest heartthrob Ranbir Kapoor. Although the movie wasn’t a phenomenal success at the box office, it did manage to strike a chord with the youth.
So when you put two and two together, you get one hell of a cool association for the Honda SUV. Whether this was intentional or accidental is not known, but it sure worked.
This is the sort of subtle advertising Honda Pakistan needs to indulge in. This movie which has been well received in Pakistan as well has already shown which segment to target and what ought to be the brand persona of the SUV.
Let’s have a brief look at the effects (or lack thereof) of marketing on the finances of the two brands.
Here are the snapshots of the profit and loss statement taken from the annual report of Honda and Toyota. Just look at the yawning gap between the two. Why has Honda done terribly bad? A Rs.401.8 million loss when your competitor has reaped a whopping net profit of Rs. 1.39 Billion in exactly the same period and circumstances should cause a pandemonium in the Honda dugout. And this happened in spite of the fact that Toyota pays more royalty than Honda, about Rs.490 million, while Honda pays Rs.287 million.
Here’s the comparative analysis of the financial statement.
But misdirected marketing strategy is not the only reason for this state of affairs. The thing is, Honda is focusing a bit too much on the Euro Compliance. All it’s efforts are directed towards making its brand more environmentally friendly by introducing ever new technologies. The problem is, leading a ‘Green’ lifestyle maybe the ‘in’ thing in the First World, in our part of the world the masses don’t give two hoots about the environment. They want cheaper cars with more gadgets and gizmos. Period.
And Toyota is giving them what they want, while Honda is investing its precious capital in something that does not add value in the consumer’s reality.
So what’s the best thing Honda can do under the circumstances? Well, it’s a bit late for an aggressive launch campaign similar to what Toyota did. One thing they can do to good effect is the use of the blogosphere.
Lately, Honda has been focusing on BTL activities more. There was a press stunt where the members of the press were invited for a test drive of the new City. A good idea. Now they need to turn this good idea into a great one. And the internet is the best place for a viral BTL stunt.
How? First they need to find a blogger who is a popular opinion leader. Whatever he says about some brand becomes the voice of his audience. Then they need to give this guy (or girl) a City to test drive, not for a day, week or month but for at least six months, twelve months preferable. Now give this person free reign to write whatever he wants to about his experience with this car. If Honda is confident about the superior quality and performance of their car over Corolla so much so that they didn’t even bother to have a proper launch plan, then they shouldn’t have anything to worry about.
Of course, the tester blogger will have some flaws to report about the car, but then no car is perfect. In fact having the opinion leader reveal the flaws (which ought to be few, if the car is that good as claimed by Honda) would convince the consumers that Honda hasn’t bought the blogger and whatever he’s reporting really is the ground reality.
Believe me, the way news spread on the internet, Honda would have an unprecedented viral campaign reaching every nook and corner of the cyberspace in no time. And at what cost? Just the cost of a single Honda City. This much amount is spent on advertising on a full page in a major newspaper, and that lasts for how long? A single day. And even then, not every possible member of the target market gets to see it.
Of course Honda could argue that even with this BTL Blog campaign, much of the target market would not get targeted. And they’re right, to some extent. And they aren’t for two reasons.
They are right because not everyone with money in his pockets have jumped onto the internet bandwagon lock, stock and barrel. Their idea of the internet is checking mail and checking the KSE (Karachi Stock Exchange) website. Period.
And they are wrong because of the following two reasons.
One, many accomplished executives have not only jumped onto the blog bandwagon, they actively scourge the blogosphere to find out what other bloggers are talking about. Whatever is happening in that world, they do get influenced by it.
Second, blogs have taken over Google. For some reason, Google just loves blogs. Whenever you search for something on Google, the top ten result Google returns more often than not lead to blog websites. (This narrows Honda’s search to a blogger who’s popular in the blogosphere). Now, which search engine do most Pakistanis use for searching anything on the internet? Google.
This essentially means that anyone looking for some information on Honda City will be directed by Google to this blogger’s website who’s writing about his experience using Honda City. Whatever he says about City would become the talk of town in no time.
Remember, it’s just the cost of a City car. This much amount can be spent on a couple of print ads, or it can be spent for generating goodwill about the car on the internet, where it will remain forever for all to see. What more can you ask for?
At the end of the testing period, Honda can either choose to take away the car from the blogger or it can let him keep the car. Choosing the latter option would again result in lasting goodwill. If the strategy achieves the phenomenal success it is slated to achieve, Honda can go for multiple bloggers.
A twist can be introduced by Honda to the proceedings by giving the blogger incentive for praising the car. If the blogger is able to generate substantial goodwill or even sales for the City, Honda would offer him cash prizes or even let him keep the car. This arrangement may be construed to lie in the grey zone of ethics, but in the world of subtle marketing, much worse has happened.
This innovative and rather daring tactic hasn’t been used as yet, (to the best of my knowledge) and it’s effectiveness will last for only so long. Once every brand starts to make use of bloggers as marketing and publicity tools, consumers will slowly lose confidence in the authenticity of it. But for now, it’s a golden opportunity for any daring brand. Can Honda be that daring brand?
Branding. It has been written off by some as a mere abstract concept devoid of any measurable output while some has exalted it to the status of a deity wasting millions in its name (think Pakistan telecom industry).
But if done correctly keeping in mind the immutable laws of branding, the result is a remarkable boost in the sales for the long haul. Corolla’s sales performance, however dazzling it may be, is short-term after all. If Corolla can deliver this result consistently over a period of 3-5 years, only then can it be deemed a successful branding endeavor.
Chances of that happening are not that bright owing to what has already been discussed – Toyota is trying to be everything to all people with just one branded shape. In the long run, it just doesn’t work..
Tags: altis, brand wars, brandscape, city, civic, corolla, Cruisetronic, csi, customer satisfaction index, geely, Honda, Honda CR-V, J.D Power, line extension, Pakistan automobile industry, Toyota, USP