Importance of Brand

According to Tim Higgins’ Bloomberg article, “GM’s Cadillac Marketing Chief Plans to Keep Ad Agency”, Cadillac is currently working on rebranding itself in the eyes of its consumers. Ellinghaus states, “Cadillac is today probably an admired brand and also well-liked brand but not a particularly — as we marketeers call it — relevant brand”. Cadillac has long been one of the top players in luxury cars, however it has gotten stuck with its old-fashioned brand image. When people think of fancy sports cars today, the first brands that pop into their minds are BMW or Audi. Cadillac has somehow gotten stuck with an old-fashioned brand image of luxury, which does not appeal to the modern class of wealthy sports car consumers.

The mission of GM is therefore to reinvent the image of Cadillac. This is being attacked from both the engineering standpoint as well as the advertising standpoint. Ellinghaus states, “My biggest job is to explain to people why they should go for Cadillac, why it meets their daily requirements, why the expression of style is right for them”. Cadillac is not content settling for fourth best, but instead is sinking significant funds into reinventing itself in the eyes of potential consumers. To substantiate the change in brand image, GM is also altering the actual image of the Cadillac cars. GM has created or redesigned 10 Cadillac vehicles that are going to be brought to the US market by 2015. The complete redesign and rebranding of Cadillac is all in an effort to make the car company a “passion brand”.

What kind of ads is Cadillac going to utilize to achieve their goal? Are they going to focus more on persuasion ads, informative ads or complementary ads? My prediction is that Cadillac will center their advertising strategy on persuasion ads in an effort to create alternative associations with the brand than it already possesses. For luxury car buyers, elasticity of demand is likely fairly low (in other words fairly inelastic). Thus, differences in pricing by a few thousand dollars will most likely not affect consumer choice significantly. It is the associations and intangibles that are attached to luxury cars that differentiate them substantially among consumers.

4 thoughts on “Importance of Brand

  1. There are price wars within the luxury car market that suggest demand is elastic. A Bloomberg article talked about the price war between Mercedes-Benz and BMW. Mercedes is offering its CLA, a luxury car, for a few thousand dollars less than BMW’s comparable 1-series. The CLA sold 2,300 vehicles in the first week of September alone. BMW only sold 468 1-series vehicles for all of September.

  2. GM had a (in)famous ad campaign “not your father’s Oldsmobile…” that managed to alienate its existing customer base of grandfathers while not endearing itself to potential younger purchasers. How does a firm with an established (but aging) customer base pull off the trick of getting new buyers without losing (literally!) old ones?

    The answer is edgy product design with plush interiors? As long as old customers can be encouraged to give it a test drive the existing Caddy customer is made comfortable, while design lures in (slightly) younger ones. But since I don’t pay much attention to cars (as opposed to the car industry) I’m merely putting forth a hypothesis, unbacked by data.

  3. How do you think Cadillac will formulate ads to draw in new consumers? It seems to me the firm needs to move away from the “grandpa” image, but in a tactful way that doesn’t alienate present consumers.

  4. Inelastic demand is an interesting concept in this market. As long as cars qualify as luxury, certain models are essentially interchangeable. The brand is the only thing that distinguishes one make from the next.

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