Sub-brand, label or core concepts

Sub-brand, label or core concepts: When it comes to sustainability, are automotive brands crafting the right strategies?

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Sub-brand, label or core concepts: When it comes to sustainability, are automotive brands crafting the right strategies?

by Michel Gabriel

A number of exciting developments lie ahead for automotive brands now that they’ve more or less overcome the global economic crisis. Reduced-emissions engines are giving way to sustainable mobility concepts, proving that fun behind the wheel and environmentally-responsible driving are no longer a contradiction in terms. Low-priced, affordable cars are making inroads into traditional markets, while the demand for premium and luxury vehicles is on the rise with growing prosperity in China, Russia and India. Looking even farther ahead, companies like Volkswagen are addressing the hot topics of the entire industry in its “Vision 2028,” with emission-free automobiles, cars to live in, networked mobility, accident-free traffic and custom-built vehicles. (See chart 1) While developments in the sector abound, undoubtedly the number one hot topic for the automotive industry in 2010 was sustainability. Virtually every major automotive brand focused on linking sustainability to their brand. However, while the sentiment was the same across the board, brand strategies differ across the sector. Offerings were still manageable not

too long ago – with Toyota’s Prius, BMW’s EfficientDynamics and Volkswagen’s Blue Motion – but these days, (at least from a consumer’s point of view), a veritable jungle of labels, innovations and sub-brands have sprung up within the industry.

Sustainability: from sub-brand to label to core brand In the high-volume segment, the focus is on making low-emission technologies available to a broad customer base at a reasonable price. This is why, in this market segment, many brands, such as Toyota with Hybrid Synergy Drive or Volkswagen with Blue Motion, are adding a “low-emissions” label.

The strategies being used in the premium segment are somewhat more differentiated.

Here too, some brands are labeling concepts underneath their core brand – for example, BMW with EfficientDynamics. At the same time, “Project i,” the company’s mobility concept based on the electric motor, is being introduced as an independent brand alongside or underneath BMW. Audi, on the other hand, is betting on a sports car with an electric engine, the

“E-Tron.” The special Audi model is intended to infuse the core brand with sportiness and an environmental cachet – without creating an additional low-emission label of its own.

Chart 1: Market trends/prognosis: Rapid growth in electric vehicles The market for electric motor components will soon be valued at up to 50 billion euros per year.

Total market value * in billions of euros (progressive scenario) 53.0

E-motor (including generators) Drive technology Battery Other electronics

7.8

13.1

24.6 3.7 6.4 4.0 0.6

11.2 1.7

1.1 1.9 0.4

3.1 5.6 0.8

2011

2014

29.7

13.1

1.4

2.4

2017

2020

* West Europe, USA, Japan, China Source: Fraunhofer IZFP/AQS, Saarbrücken. Germany Jan (2010)

Sub-brand, label or core concepts: When it comes to sustainability, are automotive brands crafting the right strategies?

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Chart 2: Electric vehicles: Road map for market introduction

Mercedes-Benz is pursuing both strategies.

Blue Efficiency is a supplement to its core brand and “E-Cell” and “F-Cell” are innovative engine concepts within its range of models under the Mercedes-Benz brand. (See Chart 2) Sustainable brands vs. branded sustainability Brand strategies may vary, but automotive brands don’t have to make an “either-or” decision when integrating sustainability into their brand. The question shouldn’t be which specific marketing strategy will prove most successful, but whether the brand is going beyond just greenwashing to create products that consistently communicate the brand’s desired connotations to consumers across the entire brand experience. The specific route a brand chooses to take is secondary to authentically addressing the changes taking place among consumers and

establishing sustainability within the brand structure.

To integrate sustainability within the brand, automotive companies should look to precise brand analysis and evaluation, which offer the relevant insights and information needed to make brand-strategy decisions. Once these insights are available, automotive brands have a number of possibilities open to them including expanding core values, evolving brand structure or reinterpreting existing brand values – any of which might be effective in creating the desired impact on the customer-experience chain. Moreover, it is always an option to introduce low-emission sub-brands to provide an image update to the core brand during a transition period

and allow the sub-brand to disappear once it has fulfilled its purpose.

In other words, there’s no “right” way to ensure that your automotive brand is perceived as sustainable. Any decisions about sustainability that affect brand structure must be made-to-measure.

Regardless of whether a strategy consists of a low-emission sub-brand or a model intended to infuse the core brand, the best strategies all have one trait in common: they impact the relevant brand drivers and positively influence the long-term value of the brand. ■

Michel Gabriel Michel Gabriel is Managing Director of Interbrand in Zurich. He has worked with some of Interbrand’s top clients and has extensive branding experience in the automotive sector.

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