It was once a niche brand in the U.S., with a reputation for selling cars where snow falls and bins overflow with granola. But for several years Subaru has been the fastest year-over-year sales leader. Last month, Subaru’s 33rd consecutive month of sales gains, the company posted its best-ever monthly sales in the U.S. That beats its former last best-ever month, which was July. Yes, the company's product is nothing like it was.
It’s not just product. The company has focused on the brand for the past few years with the umbrella "Love" campaign. Alan Bethke, VP marketing at Subaru of America, talks to Marketing Daily about how the company supported an aggressive product strategy with marketing to create a high-volume that doesn’t leave that niche free-range personality behind.
Q: How has Subaru changed over the years from vehicle centric to brand centric?
A: Seven years ago our brand was fairly inconsistent and we kind of followed the path of the other major manufacturers: incentives, product features, warranties, and deals. And that's a no man's land for us. When you are smaller brand fighting against brands that are larger with a bigger product lineup, deeper budgets and incentives, you are always fighting an uphill battle.
Q: But there's a challenge from the brand perspective connecting cars like Impreza WRX and STI (rally-inspired compact models) with better-known Forester and Outback.
A: I think historically, again, in the mid-2000s Subaru was to most people less a brand and more about those three models. Forester and Outback were similar, and then you had this core group of enthusiasts who knew a lot about WRX and STI. But the brand had less awareness and strength, and over the years we have tried to change it a lot through brand-building.
Q: Who are your owners?
A: They are very well educated, they are very smart people. They have very good incomes, and lots of money to buy a car that is more expensive than a Subaru. They have very strong credit, and they like to make good, sound, decisions. But an important part of the mix is psychographic: some of that is what you would expect: outdoor, active lifestyles — hiking, biking, camping, running, gardening, the arts — people who would rather be outside doing, rather than inside sitting on the couch, and that includes the WRX/STI crowd. We call them "experience seekers," a group who like to "do" life.
Q: The cold-weather and mountain states are Subaru strongholds. What about the South?
A: The Northeast, West and mountain regions are still the strongholds. In those regions we are the number five or six volume manufacturer, so we might be outselling Honda, Ford or Chevrolet there. But in these other states, sunbelt states like Florida, Texas and California, where Subaru sold a lot less vehicles, our growth rate has been tremendous. In the past five or six years we have had stronger growth in the south than in the north. In fact, in terms of sales per outlet, per retailer, the south is catching up. It's directionally on a steeper trajectory.
Q: What has the sales growth looked like overall?
A: We have had six years of record sales, year-over-year. If you think about the economy and competitiveness of the U.S. market, it's an amazing feat. We are on a longer steeper trajectory year-over-year than any other manufacturer in the U.S. Roughly speaking, we sold 180,000 cars in 2006, about 1.1% share, give or take, and we will be going toward 500,000 units this year, and toward 3% share. In the last two or three years we passed Mazda. Last year we passed Volkswagen. We are the ninth-largest brand in the country out of all manufacturers. We are bigger now than BMW, Lexus Mercedes, Audi.
Q: But you don't have the big budgets of your competitors, doesn't that limit awareness capability?
A: Historically speaking, we were a niche brand and the consumer thought of us that way, and we did too. Now, internally, we think of ourselves as a targeted brand. We aren't trying to be something for everyone, we never were and we still aren't. We don't use a shotgun approach, and at a 3% share we can still be very targeted and very special for the right people and still do very well in the country.
Q: How sits your awareness levels now?
A: Subaru's awareness at brand and model level had been lower than key competitors, and lower than the average for the industry, but that's changing. A lot of that is related to our advertising message. Our competitors certainly outspend us but we try to have — this will sound basic — the right message to right person at right time. Since last year we are at record levels of awareness for the brand, record levels of favorability and favorable opinion. And we have record levels of consideration and intent to shop as well. With all of that we are still outspent and that probably won't change any time in the immediate future. But we never fought with the most money. But with the ability to target consumers whether through networks and programming, or digital video means there is no shortage of ways to reach consumers. We try to use the right combination.