Pioneering marketing techniques pace the metamorphosis of automobile advertising.

Pioneering marketing techniques pace the metamorphosis of automobile advertising

The typical reaction among consumers four years ago when Acura's advertising agency did preliminary market studies for the new American Honda auto division was "$20,000 for a Japanese car! You have to be out of your mind."

Now as Acura is selling over 130,000 cars a year, Toyota's Lexus division and Nissan's Infiniti have also introduced the $30,000 and $40,000 Japanese cars. The three Japanese luxury makes as a group are already challenging Mercedes and BMW dominance in that market segment.

The difference, however, between the Acura's launch in 1986 and the Lexus' and Infiniti's launches last year, explained Ketchum Los Angeles President J. Craig Mathiesen, is that the concept of Japanese luxury automobile is now a "viable and acceptable one."

To market Acura, Honda and its advertising agency -- Ketchum Los Angeles -- had to both convince the public that the Japanese could build a luxury car as well as selling the merits of a particular model. Now Lexus and Infiniti advertising just has to tout the cars.

Acura pioneered several marketing techniques when it launched its automobiles that have been copied by Infiniti and Lexus. The most important technique was developing a separate division with its own dealerships or what is known in the industry as a "second channel of distribution."

Mathiesen said that Honda wanted separate showrooms to market Acura to the upscale, monied set who had never purchased Japanese economy cars. At the time, many automobile executives said the separate showroom idea was too expensive and would never work.

Because of the great expense of purchasing real estate and constructing new dealerships, it took a long time for Acura dealerships to get profitable, Mathiesen said.

Last year, when Lexus and Infiniti opened new dealership networks, the cost for new dealerships ranged from $2 million to $5 million apiece, depending on land costs.

In the future, the cost of building new dealerships will simply be too prohibitive for automobile companies, Mathiesen said, but the concept has paid off as Acura has already sold 85,000 units in 1990 and is the country's 18th best-selling make, according to Detroit-based Ward Communications figures.

Mathiesen said that Acura has achieved a high volume because market research indicated that 85 percent of luxury car buyers purchase cars in the lower range of that category -- $20,000 to $30,000. Though Acura has recently introduced the $60,000 NSX sports car.

Lexus models range from $21,000 to $35,000 and have sold 34,035 models this year, while Infiniti models range from $23,000 to $40,000 and have sold 11,375 units so far in 1990.

Dave Hubbard, Infiniti's national advertising manager, said that the cars sales have been climbing steadily each month and his company is concerned more with customer satisfaction than generating high volume.

While sales of Japanese luxury models are up, BMW and Mercedes-Benz sales are down in 1990. Mercedes-Benz has sold 42,591 cars as of July 1990 -- down 77 from the same period a year ago. BMW has sold 36,196, down 3,471.

John Rettie, editor of J.D. Power & Associates' California Report on Automotive Marketing, said Americans are "enamored with Japanese quality," but ironically in the Japanese home market European makes dominate the luxury market. He added that there is "tremendous growth potential for the Japanese luxury cars in the U.S. market."

Infiniti made headlines and caused quite a stir last year when its advertising agency -- Hill Holiday -- launched the car with ads that featured rocks and trees, but no cars. One advertising executive described the campaign as asking consumers to go on a $40,000 blind date.

Bob Eherenfeldt, owner of Discover Infiniti in San Diego, said the ad "was one of the most effective ad campaigns" he has ever seen. He said that Infiniti may have waited a little too long to actually show the car in its ads. Once the cars began appearing in the ads in March and April, sales began to pick up, he said.

Infiniti now has plans to expand its line up in early fall. The company sells the Q45, a $40,000 hi-tech sedan, and the $25,000 M30 hardtop and convertible and will add the G-20, an entry-level luxury sedan in the $20,000 to $30,000 range.

Mathiesen said that he does not see the three lines of Japanese cars competing directly because each one has a separate niche. Acura is positioned "for European personal performance, while Lexus offers a softer luxury style."

PHOTO : Lexus: Advertising paves the way for acceptance