Tuesday, April 07, 2009


by Al Ries (ADWEEK)

Marketing is a long-term proposition. A company can get in trouble if it changes its marketing strategy to cope with a short-term problem.

Years ago, Packard was the premier luxury car, not Cadillac. The 1915 introduction of the Twin-Six Packard, one of the first 12-cylinder automobiles, created a crescendo of favorable publicity. In its time, Packard was known as "the American Rolls-Royce."

For many years, Packard outsold Cadillac by a wide margin. From 1925 to 1934, for example, Packard sold 243,748 cars versus just 134,341 for Cadillac.

Of course, 1934 was near the bottom of the depression. Even though Packard outsold Cadillac that year, the company was concerned because its 1934 sales (6,552) were only a fraction of the 44,634 cars Packard sold in the boom year of 1929.

What should Packard do? Hey, things are bad. We need to come out with a cheaper version of our product. (How often have you heard that said in the boardroom?)

So in 1935 Packard introduced the 120, its first middle-market vehicle. Sales took off. That year Packard sold 37,653 cars, more than five times as many vehicles as it sold the year before. Obviously the new strategy was working.

And it continued to work for more than a decade. From 1935 to 1941, Packard sold three times as many cars as Cadillac, 456,503 versus 135,628.

But the brand was getting tarnished. More and more car buyers perceived Packard to be just another mid-priced vehicle and Cadillac to be the only luxury car. In 1941, for example, the cheapest Cadillac sold for $1,445. The cheapest Packard was just $927. (You can't build a premium perception on a middle-of-the-road price.)

As soon as the economy improved after World War II, Packard started to fade. By 1950, Cadillac was way ahead of Packard. By 1957, Packard was gone and Cadillac was king of the luxury-car market.(MORE)


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