Mazda_Miata

Mazda_Miata - Mazda Miata In early March 1989 Larry Kopaid...

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Unformatted text preview: Mazda Miata- In early March 1989. Larry Kopaid. Executive Vice President. and Creative Director of Foore. Cone 8t Belding (PCB) advertising agency. met with his colleagues to prepare one of the biggest presentations of their careers. Their largest client. Mazda Motor of America. had recently placed the agency into "review" status. and in three days. Kopald would present the agency's campaign theme for Mazda's latest producr offering. the Miata sports car. to Janet Thompson. Vice President Marketing at Mazda. If their campaign strategy was not approved by Thompson. FCB would lose the Mazda account to another advertising agency. ' Kepald's team had spent many sleepless nights developing rough executiOns against several positionings that had been provided to them by Mazda Motor of America. Although the advertising agency had been fully briefed on Mazda's corporate strategy. its intended marketing strategy. and possible posiriOning Options. their task was complicated by internal disagreement within Mazda as to which was the besr positioning for the Miata launch. At today's meeting. he needed to select one positioning so that his team could refine the copy and an work in time for the presentation. He believed that. at a minimum. Janet ThornpsOn and her colleagues at Mazda would ask him three questions: Which of the alternative positioning strategies was appropriate for the Miata? How was this positioning to be translated into advertising? And how did the chosen positioning support the role the Miata would play in Mazda’s overall Strategy? W Mazda Motor Corporation. named Toyo Kogyo Ltd. until '1984. was founded in Hiroshima. Japan. in 1920. Toyo Kogyo _ . emerged as a technology-oriented company. making machinery. precision insmrments. rock drills. and in 1931. its firsr vehicle - a three wheeled truck. During the 1930's and 40's. Toyo ' This ease was repared by Robert C. Hower. Research Assistant. under the supervision of Professor Rohit eshpandé. Professor of Marketing. The Amos Tuck School of Business Administration. Dartmouth College as a basis for class discussion. rather than to illusrrate either effective or ineffective handling of an adminisrrative situation. All rights reserved. Not to be reproduced without written permission. Copyright © 1992 Board of Trusrees of Dartmouth College. Ko 0 built on its success in truck maritlfaeturing. and by 1951 was considered Japan's leading truck maker. Meanwhile. To ta and Nissan had expanded into the larger an more lucrative passen ercarmarket. By the early 0's. Toyo Kogyo recognized the need to enter the car market. but lagged other . manufacturers in automobile technology. .To bridge the gap. Toyo Ko yo signed a technical agreement with Audi SU—Wankel of West Germany for the development rights to emerging rotary engine technology. In 1968. after six years of redesign work. Toyo Kogyo introduced the first commercially successful rotary engine in automotive history. The powerful. but quiet. engine was an immediate hit. and prompted Toyo'Kogyo in 1970 to establish Mazda Motor of America in Seattle. Washington. U.S. sales rose to 119.004 units in just three years. However. the global oil crisis in 1974 crippled Manda. United States government tests showed the rotary engine getting only 10 miles to the gallon in city driving. General Motors shelved its plans to produce rotary-powered vehicles. And Mazda‘s American sales dropped 60% in one year. By 1975. Toyo Kogyo reported a 17.3 billion yen ($70 million) loss and was on the brink of collapse. , The financial crises revealed Mazda's managerial and product shortcomings. A new management team from Sumitomo Bank (generally considered a part of Mazda's ket'rerstt) led the tum-around by introducing-new. fuel- efficicnt. models. In 1977. Mazda introduced the iston-driven GLC ("Great Little Car“) for $2. 75. GLC received high marks for its economy. fuel efficiency and de endability. During that same year Mazda eveloped a booklet called the "Consumer Value Formula" (which later became a series) that was written by three well-known automotive magazine editors. The Consumer Value Formula. which was available only through Mazda dealerships. along with Mazda's new product offerings. helped redefine the company as a “value” manufacturer. A year later. the economically-priced 33-? sports car was introduced and became an mstant success. ironically with a rotary-powered engine now reengineered for greater fuel efficiency. f With 5 cial reco nition mm M Itaclefioadizgtand gan D'v .lthX-7 quickly became America's best selling two seater. After its introduction in May 1978. the RX-T contributed 19.359 units to Mazda's . ear end car and truck sales of 80.017. Deman far exceeded supply. and the lack of availability prompted dealers to raise prices above the suggested retail level of $6.795. In 1984. the corporate name was changed to Mazda Motor Co oration and $550 million was' “committed for a .5. manufacturing plant on the site of an idle Ford Motor Company casring plant in Flat Rock. Michigan. Realrzin g its dealer network could not market the plant’s entire 240.000 unit capacity. Manda agreed to initially allocate 60% of producrion to the Ford Probe car. The remaining 40% of production would be comprised of Mazda's MX-o and 626 models. REPOSITIONING MAZDA FOR THE '90'S In response to growing competition. shtinlcing margins for “value” manufacturers. and federal government pressures to restrict the number of Japanese automobiles imported into the U.S.. Mazda decided in the early 80's to move its product lines up—scale. Previously. during a growing market. the value ositioning was fine: however. Mazda needed to uild brand equity in the face ,of incentive wars. See Exhibits I ti 2 for market share and financial information. The new philosophy. commonly called "niche" marketing. required more unique cars which pleased a few people intensely. rather than a lot of people. somewhat. Consistent with this new strategy. Mazda increased its number of product lines from 4 in ‘ 1986 to 8 in 1989. and ado ted more distinctive! sporty designs - even or its sedan models. I all went well. margins as well as overall sales would improve. The new Strategy relied more heavily on brand equity which at the time was not Mazda's greatest asset. Mazda's familiarity rating was below Toyora's and Honda's. and Mazda‘s name held only a slight disdnction from other Asian makes in terms of an association with styling and performance. In response to Mazda's "non- image“ problem. George McCabc. Mazda's Group Vice President of Operations told AM in August 1988: “We don't want to follow in Honda’s footste s and be a me-too car company. But in coking at Honda. the chief task ts creating an image. a mystique. which has played a big part in Honda's Success." A corporate repositioning campaign had already been under develotnment at Foote. Cone a Belding months before the Miata work had started. Larry Kopald of PCB was also in charge. of that campaign. He had coined the campaign's theme. "it Just Feels Right." which attempted to differentiate Mazda not on quality or performance. but on the overall driving experience. The campaign emerged from Mazda's emphasis on Kanrei (kahn-sayj Engineering which stressed emotional rather than rational benefits. Since no Other car manufacrurer had ever taken such an approach. the effectiveness of the campaign was difficult to predict. The corporate campaign was scheduled to follow the Miata campaign. and coincide with Mazda's new model offerings for 1990. including the redesigned 323 hatchback. 323 Protege. and the improved. luxury 929. Mazda and PCB executives were hopeful that the Miata campaign would create a positive halo for the corporate campai gn. KANSEI ENGINEERING KopaJd conceived the "It Jusr Feels Right" campaign after a visit to Japan in which he met with employees to discuss Mazda‘s approach to making cars. Kansei Engineering was the topic of nearly every conversation. The word "Kansei" is common in Japan. but there is no literal translation into English. Its broadest meaning is when all the senses are in perfect harmony. From an engineering perspective. Kansei means measuring. and taking into account. the emorional and sychological side of driving and car ownership. y early 1939. Kansei Engineering was beginning to define Mazda's corporate culture. The philoso by was most visibly ap mm at two of M a's recently constructed acilities: the Global Road Circuit (a comprehensive test ,track) and the Yokohama Research Center. The 3.4 kilometer Global Road Circuit at the Miyoshi proving grounds in Japan was a "magical" place where Mazda engineers studied how test drivers feel. Driving conditions from around the world were replicated in the track including American super highways. mountainous roads of Nice. frost heaves. pot holes. manhole cows. and even a section of 300 year old cobblestones from Belgium. Mazda engineers simultaneously compared numerical data received by the computer from sensing devices on the car. with verbal feedback from the driver. This was one of the principal methods which enabled Mazda engineers to quantify an individual driver's Kansei. The Yokohama Research facility was dedicated to advanced research into driver emorion and behavior. as well as the technology to enhance the driving experience. For insrance. Stress. fatigue. color and texture were Studied in relation to how they affect the driver. Though the first results of Mazda's new Kansci efforts were found in the MPV mini-van (introduced in the fall of 1988) the Miata was the first Mazda vehicle to t‘r’uly embody the essence of Kansei. DEVELOPMENT OF THE MIATA Miata's improbable product champion was a car enthusiast and automodve writer from California named B'ob Hall. in 1979. Hall was vacatiouing in Japan and decided to visit Mazda's Managing Director of Research and DeveIOpment. Kenichi Yamamoro. in Hiroshima (Hall had interviewed Yamamctto once before). During the visit. Yamamoro asked Hall for suggestions about what Mazda should be building. Hall did not hesitate: he picked up a piece of chalk. and in fluent Japanese. described his dream car - a lightweight. open roadster. Two years later. as Mazda was expanding its operations in the U.S.. Yamarnoto offered Hall a job as product planner in the company's California planning studio. Mazda Research of America (MRA). Initially. Hall worked on the MPV mini-van. since Mazda could only afford one major produCt development project at a time. However. Yamamoto. who by this time had risen to Senior Managing Director for Advanced Technology. believed that Mazda needed to move beyond mass-market vehicles like the compact pick-up and the 626 sedan. He was certain that Mazda needed to create distinctive ears with bold personalities like the RX-‘T. He described them as "cars that wink at customers.“ In 1983. Mazda management approved a feasibility study for building a lightweight. low cost, sports car. code named P72 . and staged a competition between three design studios d Hiroshima. Tokyo and California (Bob Hall and Mari: Jordan. a designer. headed the California team . ) Unlike the other teams. Hall and Jordan selected a front-engine. rear-wheel-drive design. attemed after traditional British 5 arts cars. ll insisted on rear-wheel-drive. w ich was a significant departure from the current industry trend. because. he explained. "when you put bver 100 horsepower in a Small front-wheel- drive car. on get wheel hop and tire spinning at low spe s in tight corners. These are not characteristics of a true rts car a sports car muSt be fun to drive.“ 's team also insisred that the car be a convertible. As his designs were being considered. he wrote in an internal memo to Hiroshima. "since we live only some 70 or 80 years. it is both impracrica] and i_rre5ponsible to refuse the simple happiness the convertible brings. When the top comes down. a two-dimensional world explodes into three. and you discover an enormous ever moving dome of sky and clouds. of sun and stars. You breathe more deeply. your vision clears." Hall and Jordan worked cooperatively with Japan to incorporate Kansei Engineering conce ts into the design of the car. Five of these eatures included: Styling - Mazda's design goals included transforming the driver into a fun motoring world. One way Mazda achieved this effect was by paying close attention to the way light plays off the Mtata's body'surfaces. The design theme was called Light and Shade. and it's goal was to create surfaces with soft transitional highlights that would influence mood as one walked around the car. The smiling front end - at the front of the hilata there is a mouth that suggests a snuiing face - was designed to en anee the fun and happiness of the car. Sound - Mazda engineers recorded and studied over 100 different exhaust notes before determining the right exhaust design and note for Miata. Mazda also worked to develop a pleasant sounding. smooth-running engine that gives the driver a strong feeling of confidence in the power of the vehicle. They found that a light. tyet strong and steady sound was more e feetive than a quiet engine Epitiitd in imparting confidence to the ver. Visual Elements - To excite the driver. a quick dumping rev counter was designed to rise and fall rapidly without the usual slow return. as the driver touched the accelerator pedal. Short Throw Shrfier - The Stick shift was designed with a throw of only 1.8" which gave the feel of a race car. Weight Distribution - By suspending the car by a wire from a pivot point. engineers were able to move componenny around the body of the car in order to achieve the desired SOISO weight disrribution ratio. In late 1984. a jury of Mazda executives declared California's design the winner. and a functional prototype was ordered to be custom- built in Britain. Upon delivery of the prototype in Detober 1985. Mazda executives and designers drove the car around southern California. Encouraged by its driving performance and public reaction. the car was quickly approved for production. No focus groups or survey research studies were conducted. Mazda produced the car on its flexible assembly line in Hiroshima. la an. Workers already asscrnbling the 929. 26 and MPV would also attach parts on the P729. 23.000 cars were allocated for delivery to the U.S. during the last six months of 1989 (the allocation reflected production capacity). The car was scheduled to be launched on the 4th of July. And there were precisely three colors to be offered: red. white and blue. MIATA POSITIONING Before the marketing meeting. Kopald looked over the assortment of creative work scattered across the c0nference table. Each execution represented a unique assessment of the Miata. As he skimmed the copy and glanced over the art work. he thought about the car. and who its likely buyer would be. From the art worlt. it a pearcd to him that there wer essentially ee ways they could go. ' - One was the original positioning Mazda had in mind when they delivered the Miata to PCB with the license plate “PURE FUN.“ Clearly. this positioning was a good fit with the anticipated use of the car. and the initial reaction most people expressed to its appearance. Another approach would exploit Miata's image as a traditional roadster (in the image of the British sports car MG). In this case. advertising would appeal to buyers who had either owned or longed for a "pure" retro Sports car (such as the MG. Triumph. or Lotus Elan). A third approach was more "product oriented.“ emphasizing the advanced engineering and technology that differentiated the Miata from earlier roadsters. This approach placed a greater emphasis on performance and reliability. and could also include the Kansei Engineering concept. However. Kopald was well aware that there was no consensus within Mazda Motor of America as to which was the optimal positioning for the car. Indeed each of the above three approaches had both strong supporters and equally strong critics within the company. CONVERTIBLES AND THE SPORTY CAR MARKET .. Kopald felt that although the positioning should come out of the car itself. there were other issues to consider. In preparing for the Miata assignment. he had first taken a look at published sales figures. Overall size. sportiness. and price tended to define the traditional automobile segments. The Miata fell into the subcompact specialty category which included models such as Pontiac Fiero and Nissan Pulsar. Kopald wondered if the Miata might appeal as much to buyers of larger or more expensive automobiles. such as Mustang, Camaro. or even Corvette. Exhibit 3 shows sales figures for the specialty car categories. KOpald also believed that the Miata would be particularly appealing to convertible buyers. a segment which in 1988 represented a more modest-sized market (150.000 units). The three best selling convertibles in 1988 were the Chrysler LeBaron. Ford Mustang. and Volkswagen Cabriolet. See Exhibit 4 for convertible sales figures. There were 28 other convertible production models for sale that year representing a wide range of quality. performance and price. However. from the Rolls-Royce Corniche II (base price: $199,500) to the Yugo Cabrio ($8.300). only three cars resembled the look of a traditional roadster: the Alfa Romeo Spider (515.060). which had a repmation for unreliable mechanicals and modest sales: the Aston Martin Volante (3163.000): and the Avanti (547.982). Lincoln- Mercury's Capri convertible. which was also a small convertible with perhaps slightly better acceleration. was cxchted some time in 1990. See Exhibit: 5 and St: for specifications and illusuationé of selected models (including a prototype of the Ctipri). More recently. Kopald had received a copy of ngswgek‘s survey of '88 model car buyers (based on a sample of 11.400 respondents). The study contained facts about the car buying process. prices and buyer demographics. It indicated that when they first thought of buying a new car. almost two-thirds of the buyers had in mind a specific type of vehicle (e.g. a compact car. a sports car). model (65%). and manufacrurer (64%). About a fifth of the buyers had just bought their first new car. The median price of new cars purchased was $13,400. with those under age 25 spending a median of $11,000. and those over 45. spending about 515.000. Buyer responses showed that the three most important reasons for purchasing a car were the need for a more reliable car. the fact that the old car required costly repairs. and the appearance of the new car. Similarly. many factors motivated a buyer to purchase a particular model. These mentioned mosr frequently as “extremely important" were reliability (46%). value for the money (39%). quality of workmanship (37%). case of handling (30%). riding comfort (30%). and fun to dnve (30951 . . Regarding demographics. the study revealed that 58% of new car buyers in 1988 were male and 42% female. See exhibits 6 and 7forbu erdemo hics. {dazda haul-Sp also hired an opinion research company. Market Line. to conduct a two-city study on the Miata in Atlanta and Los Angeles. The study used a combination of qualitative (focus groups) and small sample quantitative techniques to hel understand not only the attributes buyers ascri to the Miata. but also the demographic profile of likely buyers. In total. ll facus groups of consumers were conducted. representing owners of RX-‘ls. competitive sports specialty cars. and. in Los Angeles. a focus group of older "classic" sports car owners. - The study's preamble stated that there was agreement between groups in Los Angeles and Atlanta in terms of what kind of product Miata represented. but there were major differences in how consumers talked about the car. about its likely pecking order and buyer mindset - and thus its image in the marketplace. It explained that while most automative products can be broadly positioned at launch. the nature of the sports car buyer creates unique challenges. Psychological and emotional factors are critical. Smce consumers are keenly aware that sports cars cannot be rationalized in left brain terms. implied public signaling becomes especially important. The public image of a sports car as representing a state of mind is well established. so that issues like taste and prestige all enter into the buying decision. Below are motivations the focus groups suggested for buying a sports car like the Miata: - "Status...representing the ability -to indulge wants rather than to be subject to the dictates of needs. - . A f u n d ri v i n g expenence...maneuverability...low to the ground exhilaration... the confidence to use the car's performance both in traffic and on the road. - A statement of independence - of distancing from the ordinary. - Be recognized rather than merely noticed... deliberately attracting attention is tacky. but being admired in the execution of one's rights and privileges as sporty car buyers is not... easier to avoid challengesfconfrontadons by downplaylng the "obvious" glitz factor." The pitfalls for the Miata. according to the study. were to ap ear to be “more” than it really was in terms 0 pecking order. and to be represented. by immature stereotypes. Appealing to the "wrong'I type of person (e.g. air-heads. spoiled brats) was a big concern. The "right" type of buyer was imagined to be comfortable with himself/herself. easy going by nature - mare interested in the fun way. rather than the fastest way. As part of the research. reactions to the appearance of the Meta were recorded. Most people saw it as an attractively styled vehicle (aerodynamic. elegant. and sleek) with classic overtones. Comparisons to Alfa Romeo. Lotus and Jaguar 1(tater: common. The main concern was interior size - especially among six-footers. Otherwise. the interior was rated as plainfbasic. with more positive responses being simple. weather resistant. or classic. See exhibit 8 for selected consumer reactions to the Miata. Even critics were surprised by the price of $15,500 (used as suggested price point for the purpose of the :study). The majority generally expected a canvertible to be priced well above otherwise comparable products. and one in three estimated prices in the $20,000 and above range. Revealing the suggested price significantly increased intereSt levels. See exhibit 9 for summary statistics of the study. While the results of the two city study were highly qualitative. Kopald believed that the data provided important insights for his positioning recommendation. It also reinforced feedback the automotive press had given Mazda. He had to smile as he read a few of the press clippings that were being made into slides. Ra ra- "Better than ever. Absolute delight. We have sky-high enthusiasm for this car. Brilliantly conceived and executed. Best handling 2-seater we've driven.. wait 'u'l you drive Miata." gammy:- "Mazda takes up where Lotus left off. Unexpected. but delightful. A true breakthrough on the road. For traditional sports cars. Miata will remind you just how far modern eat-making has progressed." W - ...Ra] h and Barbara Stephens jumped out o bed early to drive 250 miles from their home near Iowa City to be at the opening of the world's biggest auto show here (Chicago). They juSt had to see Mazda's sprightly new MX-5 Miata sports car. "We‘ll order one right away.” says Ralph. 54. who teaches engineering at the University of Iowa. "I don't feel like an old professor who could retire in a few years. I feel like I did a few years out of school.“ That . winks Barbara. 50. "does wonders for all kinds of things.“ FINAL PREPARATIONS AT THE MEETING As the meeting began on March 13. 1989. Kopald first wanted to review Mazda's major objectives for the Miata. He began. "we lmow that building a loyal customer base and distinguishing Mazda's brand image will be critical to Mazda's success in the 90's. The new campaign must be able to evenmally support our premium roducts strategy. But what we aven't ta ed about are some of the potential problems we'll face.“ He condoned. "first of all. we need to understand how customers will react to some of our advertising ideas. How I will Kansei Engineering be perceived? Should we include it in the Mtata campaign? All the other sports car launches that we‘ve looked at Stress performance - like 0 to 60. and horsepower." For the next hour. the group discussod these and other issues such as how to project an upscale image. Some in the group believed that advertising the price was not consistent with a higher brand or product image. Others argued that promoting price would control the extent to which dealers could mark-up the Miata at launch. and would also signal affordability. Kopald commented that price had not yet been set at Mazda. Japan had been ushing for a higher price to recover the initiaiJSIZS million investment. however. Miata‘s product manager. Rod Byrnaster. believed a lower price would support sustained sales volume and profitability over the car's anticipated six year model life cycle. Next. the conversation shifted to media mix. Miata's modest $14 million budget needed to be closely aligned with its positioning. Mazda's 'other sports car. the RX-‘l. used a media mix that was 70% broadcast and 30% print. T.V. ads consisted of 30 second spots on sports events such as NFL football and NCAA basketball and weekend news shows; print ads were heaviesr in auto enthusiast magazines. but also ran in newsweeklies as well as W. They also discussed the timing of advertising! spending. Leading public opinion by heavier initial spending was weighed againSt a more level spending pattern. which might be possible given all the recent free publicity. Finally. Kopald looked around the room and addresscd his colleagues: "O.K_.. if we're going to keep this account. we've got to have a clear product positioning Strategy. and the logic to back it up. I'd like to go around the table and hear what you're all thinking." ...
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This note was uploaded on 09/22/2009 for the course AEM 3440 taught by Professor Wansink,b. during the Fall '07 term at Cornell.

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Mazda_Miata - Mazda Miata In early March 1989 Larry Kopaid...

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