Road-Scarce, Volt and Leaf Focus on Marketing

By Dale Buss June 14, 2011

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Nissan has begun a new TV-advertising campaign for Leaf suggesting that, if electricity rather than gasoline is the right power source for everyday devices from hair dryers to dentists’ drills, the same can be so for automobiles. Meanwhile, General Motors has just stripped a couple of features out of its base Chevrolet Volt so the company can push the small car’s entry-level price below the daunting $40,000 mark. But while Leaf and Volt parry and thrust in their marketing and positioning – including using each other as foils – the real issue is whether all this activity comprises much ado about nothing. At this point, various production and distribution constraints have kept all but a trickle of both models from American roads where they would make the biggest marketing statement of all.

Both Chevrolet and Nissan said they are heading toward major output increases that will send more of their electric-powered models into the consumer market than the several hundred that each is selling per month nowadays. Nissan now sells Leaf in only seven states, mostly in the West, but promises plenty of Leafs for all comers in the U.S. once it overcomes hugely problematic supply disruptions from the earthquake in Japan and begins U.S. production in 2013. On Monday, a Nissan executive said that the company now plans a delay from the originally scheduled December, 2012, start of production in Smyrna, Tenn., where it is building a lithium-ion battery plant that will make batteries for a new Leaf line in the assembly complex next door. And GM just announced the expansion of Volt availability from seven states to all 50 by the end of the year, with production for the U.S. market slotted at about 45,000 vehicles in 2012 compared with only about 10,000 this year.

“We’ve got a calculated and slow ramp-up plan because of how different the vehicle is,” explained Cristi Landy, Volt’s product-marketing director. At the same time, she said, the mere presence of Volt “helps lift the overall brand perception of Chevy.” And as Bill Peffer, Nissan’s director of marketing communications and media, put it, Leaf fits the brand’s larger marketing purposes even with the model’s slow phase-in. “We’re leveraging Leaf not only to generate sales of Leaf per se but also to create awareness as the ultimate proof point of innovation,” which is Nissan’s central marketing theme these days.

Early Birds
As expected, there is an enthusiastic contingent of Americans who were ready to buy one car or another long before any were available in the United States beginning around the start of 2011. By last year, both Chevy and Nissan had long lists of “hand-raisers” for Volt and Leaf and took thousands of reservations for the cars. More than 350,000 Americans, for example, requested detailed information about Leaf and began the “customer journey.” They were “exposed to arguments for Leaf and then they gauged their own level of interest,” said Brendan Jones, Nissan’s director of EV marketing and sales strategy. About 20,000 of them actually made reservations last year before the “order window” closed temporarily; then about 45 percent opted to pull out. Another 2,000 Americans have reserved Leafs since Nissan’s re-opening of the “window” in May.

“Once they become a reservationist,” Jones explained, “they go through a suitability analysis [online]: their required driving range, how much they drive each day, where they would put their charger. There is a series of yes-no questions, and at the end there is an analysis on the site which says whether, based on your driving needs, Leaf is right for you.” In fact, to those determined to buy a Leaf, he said, the company sent about 64 separate “direct-to-customer communications” about everything from charging requirements to the panoply of available financial incentives for EV purchases from insurance companies and government entities.

Both companies have noted that Americans who agree the cars are “right” for them are a little bit different, psychographically, than what they expected. Technophiles rather than “greenies” are much more prevalent; initial fans of other envelope-pushing technologies, such as iPhones, actually are more likely to pant after a Leaf or Volt than environmental true believers are. “Early on, we were thinking that [first Volt customers] would fall into the green category, but by and large they are very early technology adopters,” Landy said. “They’re not more ‘green’ than customers buying our other vehicles; they are technology-oriented.”

A Practical Matter
Having flushed out orders from those who were always in their corner technologically, ideologically, or because they have short commutes, Leaf and Volt marketing staffs have a much harder task as they look to move their vehicles into truly mass-market propositions: converting the skeptics who could or might be good candidates for their cars but don’t yet think of themselves in that way. In general, EVs and even hybrid vehicles still must overcome huge obstacles in the willingness of most American consumers to consider purchasing them.

Nissan calls its targets “pragmatists” because, well, practicality is their overriding interest and concern. “In the pragmatic model, the environment doesn’t rank,” Jones explained. “It’s on their list, but it’s below the top three of considerations for [all-electric vehicle] purchase, where the top three drivers are range, charging infrastructure, and price, in that order. For a pragmatist to consider purchasing an EV, we need to keep the value equation for the total cost of ownership competitive with that for the internal-combustion engine, and we’re working on that.”

The companies have had somewhat different tasks in getting pragmatists on board, because Leaf is electric-only and Volt is an “extended-range hybrid” with a small gasoline engine as a backup power plant. But they initiated similar consumer-education campaigns last year in gearing up for the vehicles’ launches, sprinkling their TV-ad buys with messages designed to get Americans accustomed to the idea of plugging in their cars at night or playing up the potentially ground-breaking environmental impact of the cars.

Leaf has had a more difficult road because, when its batteries reach their range of around 75 to 100 miles, the car has no power source. “Our message is about the ability to charge, and about building the infrastructure to support that,” Jones said. “If we keep educating the public iteratively about charging at home and about how chargers are being put in other places, we’ll keep converting pragmatists. When they see a charging station installed two blocks from their house, then we’ll have a sustainable model.”

Something to See
GM believes that technogeeks are crucial in getting other consumers to embrace Volt. “As you go from early adopters to ‘fast followers’ to more mainstream customers, those latter two groups rely on the opinions and evaluations of early technology adopters,” Landy said. “It will take some time, but they will help make the more mainstream consumer to get more comfortable with the car and understand it more. And it’s just up [early adopters’] alley to tell other people about it.” For instance, Chevrolet has sent all of its initial Volt buyers a Flip camera so they can record their experiences with the car and post them on Facebook. Among their entries are videos about how to optimize electricity fees for charging the car and how to fit lots of stuff in the back of the hatchback.

Chevy also is hosting “ride-and-drives” around the country as it expands Volt’s distribution footprint to the rest of the United States. “That’s an awesome way to get people to understand the product and really appreciate it,” Landy said. “You can do all the talking you want, but getting behind the wheel really does it for people.”

Brand executives consider their dealer-demonstration program another crucial spoke in Volt’s marketing wheel. GM has gotten some criticism for getting dealers to agree to take delivery of at least one Volt to hold in their showrooms for at least six months and to not move them out to retail customers despite having a willing buyer on hand. Given continuing production constraints on Volt even as Chevy continues to try to ramp up demand with all of its marketing programs, it’s difficult for dealers to keep a single Volt or two on their lots. “We went back and forth on this a little bit, but the dealers told us the best thing we could do for the long term is enforce the demo program,” Landy said.

Nissan’s production and delivery delays – so far, largely stemming from the aftermath of the March 11 earthquake and tsunami – have frustrated a number of American customers who were expecting to be driving their Leafs already. As executives continue to sort that out, they have moved to a new type of consumer-education marketing message. The first airing of an ad for the campaign, “Gas Powered Everything,” ran during the just-concluded National Basketball Association finals on ABC. Already, Nissan also has gotten more than one million hits on the YouTube cache of the ad, which already totaled 10 times the number of hits than landed over a few months by the previous ad campaign for Leaf, “The Value of Zero,” which debuted at the New York Auto Show in April.

The new ad also led to one of the first out-in-the-open skirmishes between the forces of Leaf and the forces of Volt. Until now, the cars’ clear competition for EV-oriented early adopters largely had remained on simmer, even as Volt advertising would make veiled references to the “range anxiety” that could afflict Leaf owners. But in Nissan’s “Gas Powered Everything” ad, there is a brief shot of someone filling the Volt’s gas tank – the message being that the Chevy is just like every other car, not a true technological leap like Leaf.

So, Volt marketers couldn’t resist upping the ante. “A carmaker poking gentle fun at our product ignores tow trucks they need and rental cars they recommend as backup to their product,” GM spokesman Jason Laird tweeted. While Nissan declined to comment on the tweet or on the reference to tow trucks and rental cars in the Leaf owner’s manual, Jones emphasized that one common concern about Leaf’s range is off-base. In a traffic jam during which the car might be idled or only creep slowly along for some time, he said, “The car isn’t expending energy, so it’s not going to run out of range. You’d have to sit in the car for a very long time” before losing all power.

And, Jones added, Nissan isn’t “claiming that Leaf is a solution for everyone. There is a percentage of the buying public for which Leaf would work very well, and that’s who we’re marketing to. [Volt] is geared toward a different buyer.” Landy agreed. “I honestly think they are very different vehicles for different customers, but both share electrification technology.” And in general, the GM executive said, she welcomes the fact that the two brands occasionally get in each other’s grilles, as it were. “The idea of both in the market means we’re addressing the mainstream, and they’re not just specialized, niche products,” she said. “It really helps the overall dialog about the electrification of automobiles.”

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