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No Easy Access to Brand Premium

Date:05-10 18:23 Source:autochina.comnews.cn Authour:He Lun

- Auto Q&A (85)

The first is to establish a reputation with the customer. But the premise here is that the product is good. The second is excellent branding and telling the brand story well. But the premise here is that the story is good in itself - and it still requires that money be spent. If a model only has a good reputation but doesn't tell a good story, or if it tells a good story but doesn't have a story to match, the development of brand premium will be slow and difficult. Only when the reputation is good and the story is well told can brand premium be raised quickly. There is no shortcut, and certainly no easy access.

No Easy Access to Brand Premium

Only when the reputation is good and the story is well told can brand premium be raised quickly.

There are many reasons why a car of obviously better quality and a higher price than its competitiors might not sell well, and the most important reason is a weak brand. Some Chinese auto brands positioned at the high-end of the market, such as Roewe, Luxgen and Qoros, struggle with their branding, and there are international brands like Skoda and DS that have the same problem. What is the solution?

Q: High-end auto brands cannot set a price to match because of low brand premium - so how to raise the brand premium?

A: There are two ways to do that. The first is to establish a reputation with the customer. But the premise here is that the product is good. The second is excellent branding and telling the brand story well. But the premise here is that the story is good in itself - and it still requires that money be spent. If a model only has a good reputation but doesn't tell a good story, or if it tells a good story but doesn't have a story to match, the development of brand premium will be slow and difficult. Only when the reputation is good and the story is well told can brand premium be raised quickly. There is no shortcut, and certainly no easy access.

Q: I can understand why a good reputation is important, but how useful is story telling?

A: BMW is a great story teller among luxury auto brands. Some of its marketing events are like "story clubs" and its stories have won it a lot of fans who are willing to buy BMW products regardless of PPR. Land Rover has used the story of its connections with the royal family and other celebrities, of 4WD, of luxury, and of a professional off-road driving experience in great detail – it too has won itself a lot of loyal fans.

Shanghai GM is an excellent storyteller among the mid-level brands. When presenting its products at a press conference, it describes its product strengths and user positioning clearly and vividly with an imaginative narrative, and when speaking of brand, it combines history with reality through a fascinating tale. For example, Shanghai GM has held its "Buick Day" brand event for 12 years. At this year's Buick Day, it told the story of how Nicola Bulgari, the third-generation successor of the renowned Italian Bulgari jeweler family, was an avid collector of Buick cars, and it added to that other stories of royal family members and stars. In this way, it delivered to the thousands of spectators Buick's connections with high-profile celebrities.

To be honest, Buick's early products in China were mediocre, but the brand still achieved satisfactory sales thanks to Shanghai GM's consistent and strenuous efforts on branding. Later its products improved and its brand premium rose steadily, and today Buick, as a mid-class brand, has established a high-end image. Nobody finds it strange that the price of Buick's new-generation models are benchmarked against their VW counterparts, and it has achieved great sales.Shanghai GM is a JV in which the Chinese side obviously takes the lead; it has fostered an American brand like its own and has been rewarded by the market. That is no mean feat.

Q: Brand marketing events like Shanghai GM's are expensive. What if the automaker doesn't have that kind of money?

A: There are less expensive ways of branding. The key is that you cannot skip it just because you don't have a lot of money. Brand stories have to be told frequently, continuously and with new features, so that over the years a positive brand image can be established in the market. BMW has been telling its "cultural journey" story for 9 years and it has largely succeeded in transforming its early image as an upstart.

International brands like Skoda and DS have rich brand stories. The point is to tell them to customers and potential customers in the right way.

A brand with stories can offer customers added value, so that when dealers and users talk about its products, they have some wonderful brand stories, culture, and ideals to share in addition to PPR. This appeals to potential customers and can strike a chord with them in terms of values, emotion or identity, and at the same time it can enhance the brand pride and loyalty of the dealers too.

Q: What if the brand has a short history and no story?

A: Even if a brand becomes famous overnight, it has its own stories although they may not be so glorious. Early Geely cars were extremely ugly, but they are now called "most pretty", and that process must have a story to tell. The Qoros history dates back only 8 years. But its first car won a 5-star-rating at Euro-NCAP with the highest score of that year, and it won the Red Dot design award that is considered to be the Oscar of industrial design. Such an auto prodigy must have many stories worth telling. The key is to dig up the stories, package them, transmit them, and make them part of the brand value.

Of course you cannot make up stories to deceive consumers. The story has to feel real. If your story sounds unreal or irrelevant, the money you have spent on it goes down the drain.

Q: According to you, Qoros has good cars, so it can raise the brand premium as long as it tells the story well, right?

A: Good story telling is just a necessary condition; it is not enough in itself to raise brand premium. As I said earlier, a good car also needs an extensive reputation. But if the car is priced too high, before the reputation is established, the small number of customers will limit the speed and scope of reputation growth, so not many people will be interested in hearing your story no matter how well you tell it. Besides, storytelling isn't a short-term process. It takes patience and persistence, and it takes a long time for brand stories to form a distinctive and positive image in the minds of consumers. There are always new consumers who have never heard your stories before, so you have to tell them over and over again. BMW, Mercedes-Benz and Audi are all established brands, but they still have to spend money on storytelling, which proves the necessity of telling stories persistently. Tesla became a legend overnight and gained a large number of enthusiastic fans because it succeeded in getting the media and celebrities to tell its stories for free, but that is a very rare case.So how do young high-end auto brands that don't yet have their own stories set the right price for their products? That's a question worth deep discussion.


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