New models proliferation: a risk for the brand equity?

Executive summary

In this report, I am going to deal with the marketing in the automotive industry, and in particular we would like to explore the importance of the brand equity, which is strictly related to the range’s extension by producers.

This is a steadily increasing trend, which is implemented to cope with the enlargement of the automotive markets all over the world.

Introduction

This report will look at:

·      Car’s producers offer;

·      New models proliferation;

·      Pros and cons;

·      Crucial points;

·      Management;

·      Conclusion.

Findings

Let’s start looking at the offer’s composition of a cars producer: in general, it is structured  as follows:

·      Range: it includes every single car model in the list;

·      Models: those are the offered products;

·      Versions: specific variants of every model (engine, etc.).

The problem I’d like to deal with, is the proliferation of new models, that are often considerable just simple versions with an autonomous heading list. This consideration could bring us to consider the problems related to the importance of brand’s architecture in the marketing policies.

To better comprehend the nature of our subject, I think that could be useful to take a look to its pros and cons:

Pros:

-       a wider offer could better respons to different needs and attract new 

   consumers;

-       it could generates scale economies thanks to a cost reduction based on

   the standardization;

-       less failure’s risk compared to the ones related to the launch of a brand

   new product;

-       opportunities to better control market trends.

Cons:

-       it’s a short-term strategy: succesfull innovations, that are long-term oriented, could take        

         economic advantages and better image results;

-       there could be productive inefficiencies;

-       it could leads to sure sales, but less than an innovative model could do;

-       problems related to the brand image’s management.

To get straight to the point, we have just seen how the choice of a wide offer could leads to increasing difficulties inherent to the brand architecture: every single additional model affects the brand positioning, taking it to a more abstract image in the consumer’s perception.

Ultimetly, he highest risk is the brand equity dilution.

Now we can try to check out how can managers deal with this problem.

Well, in my opinion, talking about the automotive industry, they can count on two main methods.

The first one is known to the main as “family feeling”, and it consists in the use of the same design identifiers in every model: this kind of expedient is useful to simplify the recognition of a car, making it possible for people to bring it back to a specific brand at a glance.

This method allows to influence the consumer’s visual perception in order to avoid the dispersion of the brand identity, which could split up itself in a plurality of parts: as above, this could also lead to a great difficulty in the brand equity management.

The second method is about advertising: it consists in the development of strongly characterized commercial campaigns, which have to be easily referable to a particular brand. In this case, a thoughtful use of redundant elements such as music, characters, colors, situations, or even more, is fundamental in order to enforce a long lasting connection with the brand.

Conclusions

To sum up, I would like to underline another time the emphasis that the launch of a plurality of new car models could have for the brand image and the brand equity: the range extension could lead a brand to several advantages, but it could also become a risk if it’s poorly managed.

For these reasons, it’s prominent to keep a punctilious control over every business choice: the ultimate aim is to meet the consumer’s needs, supporting a long term brand development at the same time.