VW pins failures on ‘problem’ marketers

According to Bernd Pischetsrieder, the unconventional, cigar-smoking chief executive of Volkswagen AG: “The biggest problem the car industry has, is its marketing departments.”

In a Car magazine interview likely to have given Volkswagen’s marketers indigestion, the head of the world’s fourth-biggest car manufacturer admitted failings in the company’s product record and put the blame firmly at the door of his marketing departments.

The outgoing Golf GTI is a “glorious example of a marketing-led failure” says Pischetsrieder, who goes on to blame slow sales of the VW Phaeton, a luxury saloon priced at £62,800 upwards, on the marketers’ insistence that it should be a saloon rather than coupé-come-estate.

But Mike Moran, a former marketing director at Toyota and Lexus and now worldwide director of marketing and strategy at RWE Thames Water, says: “It’s easy to blame marketing. I expect there will be some wry smiles within Volkswagen’s marketing department, with people thinking that these comments are a bit rich.”

During his time at Toyota Moran claims that marketers had very little input in the process of new product development and were all too often overruled by senior management.

However, Pischetsrieder gets support from John Sanders, who resigned as MG Rover global marketing director last year and is now at advertising agency McCann Erickson. “I think he is right in many respects. In any marketing department, so much is based on data, on looking at historical trends rather than the future.”

Most of the time, he adds, car marketers are essentially engaged in following up the few examples of successful innovation. Marketers, he says, often end up “killing ideas by consensus”. In Pischetsrieder’s interview with Car magazine, the VW boss says marketing departments are “run by people who know what customers liked in the past but have no idea what a customer wants to drive in five years”.

His comments suggest not only a disdain for marketing but also its growing influence. Marketing Society chief executive Hugh Burkitt says: “The mere fact that Pischetsrieder has made these comments is evidence of the increasing profile of marketing in the industry.” However, Burkitt observes that car marketers have, in the past, been perceived as a breed apart. “Automotive marketers have seen themselves as a different race. They behaved as if everyone else worked in ladies’ underwear while they were doing the proper job.”

That may be because the automotive industry has seen very little cross-fertilisation with other sectors. One agency source suggests that car marketing directors not only seem to have little influence, but also are also less technically proficient and gifted as marketers than other clients.

Peter Rask is a rare example of a marketer who made the leap, having been recruited by Volvo from Unilever seven years ago to become its global marketing chief. He says: “Whereas marketing was a leading discipline at Unilever, it is seen more as a support discipline in automotive companies.”

When he started at Volvo, Rask recalls a colleague telling him: “You are the person with all those words and the funny pictures.” He adds: “When I suggested to my product colleague that we should work together, he looked at me as though I had dropped from the moon.”

However Rask says things have now evolved, and as car companies have become brand houses – Volvo, along with Jaguar and Aston Martin, is now owned by Ford – the stature of marketing has by necessity increased. Rask is now managing director for Volvo in Greece, gaining the operational experience he says is still crucial for credibility in the industry.

Moran points out that there are many different types of marketing people in the car sector, “from product planners to the people who have to try to sell products that the product planners have got wrong”.

But the involvement of marketing in the product development cycle varies widely from manufacturer to manufacturer. While some have marketers involved at the very beginning, it is more common for designers and engineers to hand over a product to the marketers to sell.

Professor Garel Rhys, director of the Institute of Automotive Industry Research at Cardiff Business School, believes car marketers are put in an invidious position of having to predict the future in an industry with lead times of about three years.

Rhys says: “Nobody knows what the customer really wants, not least the customers themselves. And if the marketing is successful, the designers, engineers and accountants will all share the credit.”

Sanders and Rask admit to experiencing difficulties in assessing new models while working as global marketing chiefs.

Fiat has been one of the manufacturers least disposed to using marketing input in new product development, despite – or perhaps because of – a history of innovation that has won it more Car of the Year prizes than any other. Only in the past two years have focus groups been introduced at the start of the product development cycle, after Fiat was stung by customer resistance to its eccentrically styled Multipla. Despite excellent write-ups, the Mulipla’s sales figures have been disappointing, and a more conservatively restyled version will shortly go on sale.

Walsh Trott Chick Smith managing director Daniel Taylor was previously in charge of the Fiat UK advertising account at Leo Burnett, and at D’Arcy before that. He says marketing considerations used to come late in the day. He recalls having a dictionary definition of a “fiat” pasted on the wall, which read: “an edict issued by a junta that is expected to be obeyed”.

At a UK marketing director level, Moran say marketers have very little say in what a product will look like. The investment for a new product can cost billions of pounds and will always be signed off by the main board. For every marketing failure, there will be two or three successes, says Moran, citing the growth of the “soft roader” segment – the urban 4x4s that London Mayor Ken Livingstone recently criticised as “stupid”.

Chris Donkin, European managing partner at headhunters Courland Automotive Practice, believes marketers are in the ascendant in car companies. “Historically the route to the top of the company has been through either engineering or finance, but there is increasing evidence of top positions going to experienced marketers.”

As examples he points to Matthew Taylor, managing director of Land Rover, and Mark Fields, recently promoted to head Ford of Europe as well as the Premier Automotive Group, who both come from marketing backgrounds.

Soon, perhaps, the chief executives will have only themselves to blame.