• by Karl Greenberg , Staff Writer, April 11, 2007

After the auto show's final press day last Thursday I took a stroll uptown to meet family. It was blustery and cold out, with a biting wind out of the west tossing snowflakes across 10th Avenue like ticker-tape confetti.

Oddly, the weather got me thinking about a conversation I'd had a day earlier with Audi's marketing chief, Scott Keogh. After chatting about Audi's new vehicles and marketing direction, we engaged in a more philosophical discussion about market dynamics.

Let me preface this, if I may, by stating that I was a meteorology major for a semester, which gives me all the credentials I need to use weather as a metaphor for the marketing of cars. (At the time I wanted to be a fighter pilot, so I figured I should major in meteorology and get a pilot's license. I decided, however, after almost colliding with another plane at 4,000 feet, to pursue work on the ground.).

Keogh and I talked about the rule of three and how it seems, at any given time in any segment of the market, there are three kings, and a lot of subalterns. Whether three, or four, or two, the market leaders succeed by having created a massive revenue engine fueling production, research and development, funding fixed costs, and of course, advertising and marketing. At a certain point the "engine" of a successful volume-market product fuels itself, and the marketer's role is to try to keep a hand on things without throttling that engine, so to speak - all while also trying to understand where the market is heading.

What Keogh pointed out, and what wasn't obvious to me, is that a brand hoping to sell in large volumes can't exist for long in a lower-rung spot in the market, and it's dangerous for a marketing person to cultivate that state of mind. That's because the market isn't static - one's brand is either rising or plummeting. It's physically impossible to carve out a niche in the market and expect one's work to be done. If the market were static, BMW could give Jim McDowell another job besides figuring out where to take Mini next. That may have been possible when there were more buyers than capacity to feed them products, but not now.

Every automaker who has committed to a certain critical degree of production volume and its associated fixed costs must either become a king, or will be forced to shed production, reduce exposure in the market of its vehicles, brand, advertising, etc, and eventually, without a lot of outside cash, shuffle off to a smaller and smaller corner of the market. Keogh, who illustrated this by drawing a hash mark around a corner of a piece of paper, pointed out that the key to heading up instead of down is a certain critical mass of product on the street, product on consumers' consideration list, and good sentiments all around about the brand.

That hash mark across the corner of a piece of paper is a good illustration of what happens to a brand that has slipped beneath a certain threshold of visibility to consumers and good will. A brand in that corner is inert. One can rattle off names of brands whom investors have tried to restart, unsuccessfully, by pouring astronomical sums of cash into their tanks -- to fuel production, but also the nearly as massive variable costs involved in getting consumers to remember a brand, or remember what it was back when who it was actually what it wanted to be.

Growth is fueled by revenue, which is fueled by sales, which fuels and is fueled by awareness, which is fueled by sales and advertising and marketing, which is fueled by...etc. Critical mass means a brand has created a market cyclone that no longer requires a continuous infusion of cash from outside the engine to keep it spinning. And that's where the meteorology thing comes in.

Meteorology is incredibly complex, which is why I only lasted a semester - all right, two weeks, but it was an extended two weeks. What I do remember, between keg parties, is that the calculus of heat, relative humidity and pressure prevails in thunderstorm formation. And while there are larger or smaller thunderstorms, they are all large compared to even big cumulus clouds. There are no tier two thunderstorms, no small thunderstorms the size, say, of a tree. All thunderstorms are large events, born out of convection engines: humid air gets pulled skyward at an accelerating rate, which pulls more, which pulls more, until there's a thunderhead, and then the storm.

They may be ephemeral but storms last longer than the average cloud, which are either growing or disappearing; they never stay still, never become perpetual medium sized clouds because the atmosphere, like all physical systems, is dynamic and doesn't allow stasis.

Which is why the better things get in Torrance, the more depressed Jim Press looks. Why is that? Maybe he's worried about that storm dissipating because of some tactical mistake, perhaps with a powertrain strategy, brand positioning, any number of things that could change the business dynamic in someone else's favor.

Toyota desperately wants to figure out how to control the revenue convection engine without dissipating the storm or letting it get out of control. "Where is the market going? What's the next big thing? What is it?" The marketer's conundrum is to do the impossible: create the storm, keep it alive, figure out how to keep it away from arid territory, and convince people with the purse strings that the company needs to start moving toward the next big thing now, not next week or next month because that will be too late. Some other storm will have sucked all that moisture up already.

As Hyundai's former CEO, Finbarr O'Neil, once described it, it's like trying to fix a flat while riding the bicycle. Or he may have been talking about his bicycle.

Keogh, speaking of Audi, said the brand has been successfully leading with product, but at a certain point, it's not enough because it can't be sustained: at some point, in order to charge into the first tier of the luxury market - which is a volume market (we aren't speaking of the ultra-lux market which is defined by tiny volume, high per-vehicle revenue) -- the brand has to coalesce into a kind of electricity-generating engine.

If, at this point, you're saying "for corn's sake, this reminds me of my life," you'd be right. Individuals who "make it" assuming that's defined strictly in financial terms, do so by taking on higher risk - in investments, education, a professional gamble, or maybe professional gambling -- in hopes of creating a certain amount of critical mass for themselves. As my mother used to put it, "You've got two choices in life: doctor or ditch-digger." She was wrong, of course. You can also learn Word and become a temp, but that's another story.