Elon Musk: Stop discounting the Tesla

One sure sign of a failing brand (or a failing market) is if it starts discounting. Fighting on price is sure fire way to send you into irrelevancy, unless you’re Walmart whose brand is but on low prices.

Elon Musk understands that. The CEO of Tesla sent an email to the entire company to vehemently stop discounting its cars. Musk and other Tesla executives caught wind of some situations in which reps discounted the cars.

Elon Musk understands discounting would lower the value of the Tesla brand.

In response, Musk said, “There can never – and I mean never – be a discount on a new car coming out of the factory in pristine condition. That is why I always pay full price when I buy a car and the same applies to my family friends, celebrities, no matter how famous or influential.”

Tesla has had a “no negotiation and no discount” policy since it started selling cars a decade ago. And there’s a reason for that. Fair price (or in this case, a luxury price) is important because consumers see the value in the brand and the product. We, as consumers, instinctively believe that you get what you pay for. The best product is not the lowest priced one. For some, always buying the top price means you are getting the best.

Discounting a Tesla is the start of brand failure.

The lowest priced products are rarely the market leaders. Sure, there are some items we will search for the lowest price, but in general we equate price with quality.

If you think about all the brands and markets that are currently struggling, most of them (if not all) began that descent by discounting. It’s an attempt to buy market share, forgoing the difficult work of actually creating a meaningful and preferred brand.

You become mired in a losing proposition once you battle on price. You will forever battle on price. Margins will shrink. And you will have taught target audiences to shop on price.

Think of the major pizza chains. That war is waged on discounting. Few see the difference between Pizza Hut, Domino’s and Papa John’s, except on the daily deals. Musk’s outrage is well placed. He knows that the perceived value of the Tesla cars will drop into the fray if the cars are discounted.

Apple Sirius XM would be a bad fit

The battle over market share in the automobile industry will be fought over technology, according to a study by Nielsen. With that in mind, CNBC’s Jim Cramer said an Apple Sirius XM acquisition would make sense so Apple can own more space in auto technology.

For the first point, consumers are already expecting a greater level of technology in their cars. Most of us have become accustomed to using Bluetooth to play music and podcasts from our phones through the auto’s stereo system. And GPS is now simply a table stake. It’s what you have to have to even be a car manufacturer.

But the stakes are getting higher because the differences between automobiles are small. They all last longer, get better gas mileage and have similar designs.

Now, though, the new expectation is that all cars will have rear camera mirrors, smartphone-linked media functionality, blind spot detection, surround view cameras and smartphone-navigation interfaces. If they don’t have those things, then you can’t be manufacturing cars.

That doesn’t even take into account the coming of driverless cars. Like most of our devices, we’re expecting our cars to be smart, just like our phones and, for some of us, our homes.

Apple Sirius XM would not fix Apple’s issues.

That’s why Cramer is proposing the Apple Sirius XM acquisition. Apple is reported to be working on a car itself. Even if that doesn’t happen (and I have my doubts), Apple wants to be more important inside the car than it is now. Just like any technology company.

Apple Sirius XM
Apple doesn’t need Sirius XM.

But Apple Sirius XM is a bad fit. While Sirius XM is adding subscribers, it doesn’t fit within Apple’s brand. Apple doesn’t have permission to own Sirius XM. Actually, more accurately, Sirius XM doesn’t fit into Apple’s brand of “Think Different.” Sirius XM is radio and, while that has value, it does not represent the true innovation that has made the Apple brand.

Admittedly, Apple has lost its way a bit in fulfilling its brand promise. The brand that Steve Jobs built set very high expectations that Apple hasn’t met recently. It just keeps trotting out new versions of the products it already has, while purchasing Beats in an attempt to goose Apple Music. What would it need Sirius XM for?

If I were Apple, I’d concentrate on new products, not just acquiring new properties in the hope that they will help. Any new innovation must come from Apple. Because the reason people buy Apple products and stand in line for the first run of them is because of the brand.

If the new product or service does not represent “Think Different,” than Apple shouldn’t do it. And Sirius XM is not different.

Pop Culture lives on coolness

Pop Culture relies on fashion sensabilitites

Volkswagen as pop culturePop culture is a risky brand business. I heard a report this morning on Marketplace about Volkswagen. Basically, the report focused on the effects of the VW settlement on the automaker’s product development pipeline. The reporter stated that the multi-billion dollar settlement would make the Volkswagen new model pipeline a bit bumpy. He said that it might put a crimp on the innovation that VW hopes to achieve to keep their product line COOL.

Cool is a scary word for me in the branding business because the idea of cool is all about making a connection to an aesthetic sensibility that is connected to personal taste in an odd way. In some ways, maybe many ways, cool can be defined as a fad.

Cool is hard to bank on in pop culture

What was cool yesterday in pop culture may not be cool today. What was once considered cool can digress into downright kitsch. If you want proof, take a trek to Graceland and – aside from the greatness of Elvis’s talent itself and the voyeuristic thrill of peering into the private life of a celebrity – you’ll find that there is NOTHING in that mansion that we covet today.

Graceland is Pop cultureWe don’t want the blue shag rugs or the clumsy devices that passed for high tech in the day. What was once cool (and even, in the case of Graceland, where no expense was spared) is just a pile of dated junk. Pop culture cool just does not have legs. Cool by definition is mercurial.

Apple used to be cool. Much of that coolness came from the charisma and genius of Steve Jobs. Since his death, Apple is just innovative and has yet to hit the mark with the same coolness that Steve naturally oozed and made Apple products de rigueur.

Cool can be a goal for some brands. But hitting that sweet spot is a difficult task in pop culture. Predicting success is even more difficult.

Recognizing what is cool and developing product to that standard is near impossible. The parent brand can deliver permission for its coolness but adoption of that next cool thing is more about happenstance.

But it is not just a problem with Pop Culture

Movies as pop cultureThink about this for a moment: The major movie studios try to produce blockbuster movies. While they may not use the word cool to describe their intent, you certainly would not be stretching the definition of coolness by thinking about it in terms of a movie’s appeal.

What interests me here is how often the movie industry misses the mark. The studios invest millions of dollars in a script, director, cinematographer and proven stars and still turn out a BUST. You would think, with all of their resources, they would have more hits than misses. But predicting popularity is that near impossible.

Brands that make their reputation and mark by being considered cool are only as valuable as their latest iteration. The rest is left up to chance.

Chevrolet must not back off its Silverado video

Recently, I’ve been doing a lot of thinking about how the only way advertising works in this age of TVs, iPads, iPhones and all the information we get over the Internet is if that advertising is bold.

There’s just too much out there and so much advertising gets lost in the noise. The messages are the same tired ones, the overall feeling from them are bland and advertisers soon move onto a new campaign that is just more of the same.

I’ve ruminated on this subject quite a bit recently, noting that Bodyform out of the UK is making a bold stab and the bold move of Sprint using Verizon’s “Can you hear me now?” guy is one to notice.

But the lack of boldness still dominates advertising, which is why a simple video by Chevrolet has gone viral. The video shows the bed of a Ford F-150 truck being pummeled by falling bricks while the Chevrolet Silverado suffers minimal damage. In just 48 hours, the video has 3.3 million views.

The Silverado video is exactly what Chevrolet should be doing.

I get the entertainment factor but I also think its viewers are responding to a brand directly taking on another, something brands are too often afraid to do.

It seems even Chevrolet is hesitant. Sandor Piszar, director of truck marketing for Chevrolet, told Marketing Daily that the video “isn’t an attack on Ford.”

What? That’s exactly what it is and Chevrolet should do more of it. Why is Piszar backing off? If he wants to the video to get more notice and, more importantly, more truck customers to prefer the Silverado, then he should say: “Yes, we are directly taking on the Ford F-150. The Chevrolet Silverado is clearly superior.”

It’s systematic of advertising today that even when a brand (Chevy) has taken the bold move to face a competitor one-on-one that it backs off.

Isn’t the point of stealing market share that you’re stealing it from a competitor?

The Pacifica Dad Brand

There’s little that’s unique in Chrysler’s relaunch campaign of its Pacifica minivan. The messages are about having a safe vehicle to take care of your children, highlighting the van’s reliability, space and technology.

Ho hum. We’ve seen and heard that a million times, which is why these spots would normally be ignored.

What makes the campaign different is its intense focus on the dad of the family, not the mother. The spots feature comedian Jim Gaffigan, using his real children with one spot including his wife.

You don’t normally associate a minivan with the father, but research suggest that the number of stay-at-home dads is increasing the US. Some sources say more than two million men are stay-at-home fathers.

The Gaffigan ads aren’t suggesting that the Pacifica is only for such dads, but the campaign does speak to a changing demographic. Traditional father-mother roles are changing, with more two-income families and a focus by many employers on work-family balance.

The positives and the negatives of the Pacifica campaign.

If the campaign does nothing else, it makes you hesitate. I find it interesting that Chrysler has taken this strategy because it is unusual. Usually, car manufacturers simply regurgitate the same look, feel and approach as their competition.

But different is better in a world where we are inundated by thousands of advertising messages per day (even a logo on a pen is a message).

Chrysler relaunched the Pacifica (it had been discontinued a few years ago) even though sales of minivans have not been strong. Even with lower gas prices, consumers favor crossovers and SUVs over minivans.

The only aspect of the Pacifica campaign that might sink it is that Gaffigan describes buying a Pacifica as improving his “Dad brand.” Ugh. That is much too clever and clever is always your enemy in marketing.

The reason? Because clever is not believable, and feels written by an advertising agency so you immediately ignore it. That is, once you hear Gaffigan talking about his “Dad brand,” it stops becoming authentic because you know some copywriter wrote it and chuckled at its cleverness.

But let’s keep watching and see if more manufacturers take some chances.