Peugeot Citroen cannot trim its way to profitability

Tom Dougherty, CEO – Stealing Share

14 April 2014

If you’re cutting costs, then something is wrong with your brand

Does it not amaze you as it does me how many brands believe that the key to success is in cutting costs and product choices? If the problem is linked to either of these inefficiencies, then the management is already to blame. After all, were they sleeping at the wheel? Did they not see the inefficiencies and wasted costs? Of course they did. In light of that, the problem with Peugeot Citroen is a brand problem, not an industrial one.

“Like many manufacturers in many categories, a company can get lulled to sleep thinking that its brand is made of metal, leather and plastics.”

 

Peugeot CitroenConsidering the increased European purchases for other manufacturers (from mainly Germany and Japan), the problem that Peugeot Citroen has is one of preference not business costs. The brand simply does not carry the same panache it did in years ago and this has little to do with product advancements and new models.

It is a confusion of the elements of brand and its relationship to preference and margins. The Germans pretty much own the upper echelons of luxury and the Japanese seem to own smart and efficient. Peugeot Citroen?

Well, it owns staid and dull. It doesn’t own the models it sells. Those models are as sweetly European as ever. What is dull and staid is the brand itself.

Peugeot Citroen is not alone

Like many manufacturers in many categories, a company can get lulled to sleep thinking that its brand is made of metal, leather and plastics. In fact, the brand is made up of emotions, feelings and the belief systems of the customer who buys it. It is WHO they believe they are when they own it.

Sadly, Peugeot Citroen thinks that the secret to its brand success is going to emerge from a cutting of models to 26 (from 45) and that the new “Back in the race” theme will signal something important to the current auto buyer who is rejecting Peugeot’s cars now.

Good luck with that. Making a new auto buyer covet your brand takes more than a clever slogan and a major government stake in the company itself. It requires an understanding  (rebranding) of the switching triggers and aspirational self-descriptions of the people it needs to influence.

See more posts in the following related categories: automobiles Citroen Peugeot Peugeot Citroen

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