Youth may help car makers weather downturn

As the economy continues to soften, Canadian consumers are gearing down on spending and putting the brakes on new car-buying plans. While some car manufacturers in Canada are adjusting to the economic changes with price-slashing incentives, others are staying the course, and even increasing efforts to zero in on the youth demographic.

As the economy continues to soften, Canadian consumers are gearing down on spending and putting the brakes on new car-buying plans. While some car manufacturers in Canada are adjusting to the economic changes with price-slashing incentives, others are staying the course, and even increasing efforts to zero in on the youth demographic.

‘In the last 12 to 24 months, we have seen a very definite trend in marketing cars towards new and younger consumers,’ says Chris Travell, VP of Maritz Automotive Research in Toronto. ‘This is not necessarily indicative of the recessionary environment, but is more of a long-term strategy to draw young consumers into a brand.’

Doug Stewart president of Youth Culture Research, adds: ‘The advantage of marketing to the 15-24 age group is that these people have a disposable income. They are the consumers of today and they’ll be the consumers of tomorrow.’

DaimlerChrysler, which experienced the greatest year-on-year sales decline of 33% during September, is now pulling out all the stops by upping its traditional fourth quarter marketing budget. The budget includes a new marketing package to appeal to the youth demo.

‘We certainly strive all the time to get the younger people into our vehicles, particularly cars like the Neon and PT Cruiser, which are entry-level vehicles,’ says Ron Smith, VP of marketing at Windsor, Ont-based DaimlerChrysler Canada. New TV and print ads for these latest models were launched in mid-October, with a skew towards the college students. DaimlerChrysler recently took its PT and Neon models on a nationwide university campus tour (See ‘Promo Files,’ page 6).

Chrysler’s new Dodge Ram 2002 is also being launched with a TV spot designed to appeal to a young audience. The spot, designed by PentaMark Worldwide, a division of BBDO in Toronto, features the youth-friendly Aerosmith video and soundtrack, Just Push Play. The Jeep Liberty 2002 is now being advertised in PentaMark’s ‘Eagle Eye Exam’ spot, while another spot, ‘Boy Meets Girl,’ is focusing on the PT Cruiser.

‘Some people tell you that when business softens you should pull back and not spend too much, but I take the opposite approach,’ says Smith. ‘We are going out and increasing our marketing efforts for the fourth quarter to show people we still have wonderful, high-value products and this is a great time to buy.’

A new advertising campaign for General Motors’ latest Chevrolet Avalanche model was launched Oct. 11, also with a youth spin. The debut involved a national TV spot created by MacLaren McCann of Toronto, which is being aired during the Survivor – Africa series. ‘The vehicle is very rugged and fits in well with the image of the Survivor series and the show’s young viewers,’ explains Stew Low, spokesman for the Oshawa, Ont.-based General Motors of Canada. The spots are complemented with outdoor and print ads.

Another of GM’s recent campaigns includes a series of four brightly coloured spots for the new Pontiac Sunfire series. Also designed by MacLaren McCann, the spots, which launched on national TV on Oct. 1, have an urban, edgy feel to appeal to the youth market.

Toronto-based Toyota Canada is also making a subtle shift towards the youth market.

‘In the last few weeks we sat down and completely re-evaluated all of the marketing activities that we had going on nationally and regionally,’ says Tony Wearing, group VP in charge of vehicle sales and marketing at Toyota Canada. ‘We didn’t make any major changes in the launch of our new models, but we now have to be a little more sensitive as to when and where our whole approach is going,’ he says. ‘Recently there’s been a general direction towards the younger demographic, as they are the drivers of the future.’

Wearing says he anticipates a continuing downturn in the economy during the months ahead, but he is optimistic that new models of proven vehicles such as the Corolla will give Toyota added momentum. ‘The products we have coming to the market now are very appealing to the younger consumers.’ Toyota’s graduate program also offers discounts on selected models to recent graduates.

To launch its 2002 models, Oakville, Ont.-based Ford Motor Company of Canada has created a series of national TV spots that have a two-pronged approach to target the family unit, as well as the single thirtysomething consumer. ‘All of the new ads focus on the point that a Ford car is not just a vehicle to get you from A to B, but it is part of your whole image and lifestyle,’ explains Claire Pharand, advertising manager for Ford. Spots produced by Young & Rubicam’s Toronto and Montreal offices are currently running for the Windstar model, while another spot for the ZX5 Focus is due to be launched late this year, and the Taurus will be advertised in early 2002. Pharand says: ‘Of course we have been hurt by the softening economy (a 16.1% fall in September), so we needed to adapt and bring our advertising strategies forward. It was a major decision to produce these ads in Canada rather than the U.S. to make them closer to our own market.’

In the current climate, Charlie Reid, VP of auto industry practice at Cap Gemini Ernst & Young in Toronto, says moving excess vehicles is taking priority over new marketing plans. ‘The current market trend is that a car is fundamentally a fashion statement and this doesn’t necessarily motivate buyers,’ he says.

‘Marketing trends in the auto industry cannot be linked to economic climates as vehicles are currently designed four years before they get to the showrooms,’ Reid says. ‘Car makers need to design cars in a much shorter cycle so they can market them towards what the market actually wants, and increase what they have to offer in the way of customer incentives. This would make the marketing angles really quite rich.’

As sales and leases of new cars in Canada plunged 12.7% in September, and the Big Three all announced production cutbacks in Canada and the U.S., many manufacturers are placing an increased importance on customer incentives. Among its latest incentives, DaimlerChrysler is offering 0% financing programs, and is also trying to lure customers with a contest to win a trip to Salt Lake City, Utah.

Toyota, which experienced a year-on-year sales dip of just 1.4% for September, is responding to market slowdowns with special low prices on leases and finance rates during October and November. A number of price packages have been repositioned for models including the Camry sedan 2002. A print ad campaign around the Camry, designed by Saatchi & Saatchi, launched on Sept. 10.

General Motors of Canada has not altered its marketing plans since Sept. 11, despite a year-on-year sales decline of 15.3% in September. However, prices have been slashed across the board in an effort to sell old models. Low says: ‘We have some clearing out of past year models going on across the country at the moment, but that is something we would normally expect to do at this time of year.’

According to Sophie Mair, SVP of customer relationship marketing at DraftWorldwide Canada in Toronto, car manufacturers have started to show more creativity in their marketing approaches since the economy started to slide, with an increased focus on direct marketing and Internet advertising. However, she believes they should be thinking more about building long-term relationships with their customers, and less about making a quick sale.

‘At times of recession, it is more important than ever to build loyalty and retain existing customers,’ she says. ‘What they should be doing is looking at the longer-term benefits of relationship marketing, concentrating on retaining customers across all demographics and drawing them into the whole brand.’

Commenting on demo-focused trends, such as the youth push, Reid says: ‘We are starting to see finer and finer granulating of the market segments. As companies get more sophisticated in analyzing market demands, we will see even more campaigns emerging to appeal to smaller and smaller sectors.’