In Trucks, Bare-Knuckles Marketing Continues

In Trucks, Bare-Knuckles Marketing Continues

By Dale Buss

In a throwback to a simpler era, the new Ford F-150's drop-down tailgate step has become an entertaining flashpoint in the marketing war between heavyweights in the pickup-truck segment.

In a current TV ad for the Silverado, Chevrolet's celebrity pitchster, Howie Long, tweaks the addition of the "man step" to the F-150 as an embarrassment -- because it only helps make up for the unreasonably long reach required to get over the tailgate to the bed of the F-150.

But Ford executives assert that Chevy's gambit actually highlights an appealing innovation for potential truck buyers -- and makes them more likely to choose an F-150.

"Our steps have done very well, because they're selling at about 30 percent of the mix of our F-150s," said Doug Scott, Ford's truck marketing manager. "So I hope GM keeps running the ad [in which] they're panning it."

Core Customers

Against the backdrop of the auto-industry sales meltdown and an even tougher environment for pickup trucks in particular, talking smack over a single feature might seem out-of-place or even old-fashioned. Are truck buyers really interested in some tailgate step when the very survival of two of the biggest manufacturers, GM and Chrysler, has been at stake?

But the buzz about the F-150's steps actually goes to the heart of the new marketing strategies of the five major pickup-truck manufacturers: Appeal like hell to the core customers who care about every point of functionality of their truck and how it's put together, because they're basically the only buyers left.

"People driving pickup trucks just for the sake of driving a pickup because it's cool have exited the segment," said Vinay Shahani, director of truck marketing for Nissan USA. "So marketing messages have to be focused on the durability and utility of the truck and industry firsts that you have to offer."

George Pipas, Ford's head of U.S. industry analysis, said that "the people who were buying pickups and only putting a garden hose or a fishing rod in the back are now going for something else." As a result, he said, even after any economic recovery, pickup trucks probably will comprise only 11 to 12 percent of the U.S. automotive market over the long run, compared with about 15 percent during the segment's heyday a few years ago.

Edmunds.com statistics shows truck sales were only 19.7 percent of the total market in May and was as low as 10.4 percent in February.

From the segment peak of about 2.5 million units sold in 2006, pickups slid to about 2.2 million units in 2007 and about 1.6 million last year. This year, truck marketers expect to sell only about 1.1 million vehicles based on current trends.

"Our goal is to maintain our branding presence in this shrinking market and also be smart about how we're getting our message out to people who are actually buying," said Kevin Higgins, corporate marketing manager for Toyota's pickups and SUVs.

A Long Fall

It wasn't supposed to be this way, of course. Three years ago, even as recently as two years ago, pickup trucks remained a booming business, with "lifestyle" buyers comprising a robust part of the mix, the housing boom providing an ongoing kick to sales, and a strong U.S. economy keeping core pickup customers coming back to dealerships for replacement and expansion vehicles. GM and Toyota launched redesigned versions of their stalwart models in 2007, and Ford and Chrysler were gearing up to introduce new F-150 and Dodge Ram lines late last year.

But $4-a-gallon gasoline began shredding the segment last year, and America's first-quarter economic paralysis has continued the trend so far this year.

So, introductions of the new F-150 and Ram, once considered so crucial, have amounted to spitting into the wind. And all the OEMs are left figuring out how to fight for scraps of a dramatically shrunken truck segment while they -- and the rest of the world -- hope for a general turnaround in the U.S. auto market that will make for more promising long-term conditions.

"Pickup-truck sales tend to lead the country out of recessions," said John Schwegman, group manager of Chevrolet truck and product marketing. "And we think that market recovers quickly."

All the OEMs also hope to tap into an expected deluge of demand once the federal government releases substantial chunks of the hundreds of billions of dollars of construction funds included in the economic-stimulus package. Some already are making blatant appeals in that direction. A recent TV ad for GMC's Sierra line, for example, puts it: "Sierra: Because America can't rebuild itself."

Four Commonalities

But for now, the pickup-truck market is what it is: a mere fraction of its former self, populated by financially squeezed and ever-more demanding core buyers. They are construction contractors, farmers, ranchers and other small-business owners as well as "mixed-use" buyers who might also utilize their trucks for recreational purposes such as hunting, fishing and jaunts to a vacation home.

Because of these characteristics, there are some strong commonalities in how OEMs are marketing their wares now:

- Feats of mechanical derring-do are less important but still glorified, most prominently in the TV-advertising launch campaign for the new Ram. The centerpiece was the Dodge Ram Challenge, a "real-life, high-energy product attribute demonstration pitting American icons against one another on an obstacle course built in the rough California terrain," as Chrysler put it.

- Most OEMS continue to slather thousands of dollars of incentives on the hood of each new truck that they want to sell -- simply because in this economy, lush incentives amount to mere table stakes. "With the tough economic climate, everyone's looking at every penny they're spending and factoring that into the purchase consideration more than they ever have been," Schwegman said.

Trucks hit a record $5,953 in incentives on average for every truck last September, according to Edmunds.com's calculations. In May, the average dipped to $4,201. 

- While truck marketing as a segment is still way underrepresented online compared with other types of vehicles, OEMs are going there more often as an effective means of reaching serious consumers. "People who need a truck are still out there shopping," said Edmunds.com analyst David Tompkins, Ph.D. "And they're responding to advertising."

- And more truck marketing now concentrates on features such as enhanced fuel economy, hauling utility and reduced cost of ownership.

The Man-Step Brouhaha

Which brings us back to the man-steps. (By the way, Ford doesn't call its tailgate and box-side innovations by that name.) Long -- the NFL Hall of Fame defensive end who continues to shill for Chevy -- also lately has picked on the new Ram and on the Toyota Tundra in other ads. But his persecution of the F-150 has been the most interesting thread.

The feature was available last year on Ford's Super Duty line, a pricier nameplate than the F-150 line, and more than 50 percent of buyers chose the option, Scott said.

"We were talking to customers out in the parking lots of do-it-yourself stores in Houston, and people said it would make getting stuff in and out of the truck that much easier," said Sharon Wacker, group contractor for Ford truck advertising through the Team Detroit agency, in Dearborn, Michigan. "When you add up over 365 days a year and maybe five years, you're looking at a lot of times the owner might go into and out of that bed."

So Ford has been emphasizing the utility of the available tailgate and box-side steps in its advertising. In one TV spot, F-150's own celebrity spokesman, actor Dennis Leary, claims that the steps will come in handy "the 50- or 60-thousand times" an owner might need access to the bed over the vehicle's lifetime.

But that doesn't mean Chevrolet is letting up its attack.

"Ford got complaints about [the old F-150] and the reach-over into the bed," Gary White, Silverado's lead engineer, explains to Long in a Chevy video promotion available on YouTube.com.

Long answers in the video: "So instead of fixing the problem -- the height of the sidewall -- [Ford] added a step. With Silverado, you don't need a side step to get in. If you're going to make improvements, make improvements that make sense to the customer."

In an interview, Schwegman elaborated on why Chevrolet saw the man-step issue as such a vulnerability for the new F-150. "If you have to step on the pickup to get into your vehicle, it probably tells you the height level of your bed might be too high or the sidewalls on your vehicle might be too high. We made sure ours didn't go over the top in that regard. Would you rather have the [step] or our [100,000-mile] power train warranty?"

Aside from the man-step issue, here's how each of the five major players in the segment is approaching their marketing these days:

General Motors

First-quarter sales for the Silverado line, GM's largest truck nameplate, plunged by more than 45 percent, according to Edmunds.com data, and are projected to come out at only about 270,000 units for all of 2009, down more than 60 percent from their 2005 peak of 706,000 units.

And, of course, GM is the only one of the Detroit Three that hasn't freshened its product line in the last several months.

So in Silverado advertising, Schwegman is focusing on what he described as the long-term attributes of the line: "power, pulling and payload." He also is emphasizing what he described as the products' segment-leading costs of ownership and resale value.

"Our 100,000-mile power train warranty, for one thing, is a key to cost of ownership -- and Ford doesn't have it," Schwegman noted. "Dodge has a version but it isn't as comprehensive."

GM also is touting the XFE (for "extra fuel economy") versions of Silverado and Sierra. Utilizing lighter-weight materials, a slightly different axle ratio, and a tonneau cover as standard, GM engineers were able to squeeze out an extra half-mile per gallon on the highway and the city. "In the current environment," Schwegman said, "every half-mile counts."

Chevrolet also is still trying to get broader public acceptance of its Avalanche model, which converts from a type of truck into a type of utility vehicle. "That's a diamond in the rough," Schwegman said.

Despite the new F-150 and Ram, he noted, "We're able to hold market share. It's proof positive that our truck isn't dated and uncompetitive. And from a portfolio perspective, we feel we have the widest range of offerings."

Ford

The F-Series is up 6 points of truck-market share since the launch of the new line, Scott said, on its way to what Edmunds.com estimated will be sales of about 326,000 units this year. That compares with the F-Series' best sales year, 2004, when nearly 890,000 trucks were moved.

And Pipas noted that transaction prices for the new F-150 are about $2,000 higher on average than for its competitors.

One big reason for both gains so far with the new F-Series, Scott explained, is that Ford has been selling a far higher proportion of the line's pricey SuperCrew version, which provides about 6 inches of extra legroom in the rear seat. About 58 percent of the mix in April was SuperCrew, he said, compared with the roughly 50 percent he had expected. "And," Scott added, "there has been no let-up in that kind of proportion since launch."

Ford also has used Leary to underscore the company's identification with core customers. "Odds are, if you're one of the people in America with a pickup truck, it ain't a luxury," Leary intoned in one F-150 TV ad.

Wacker said that Ford also is reaping benefits from simply referring back to brand and product attributes that truck buyers have become used to associating with the F-Series, such as the venerable tag line, "Built Ford Tough."

"After years and years of selling and being No. 1, we know our customer," Wacker said. "That has been very important to Ford for a long time -- knowing what they need and what's going to help them get their jobs done."

In addition, Ford believes that while the so-called lifestyle buyer may never return in large numbers to the segment, there remain plenty of "mixed-use" buyers who are reachable. The kind of person whom Scott calls the "never never" buyer -- because they never tow and never go off-road -- is gone.

But Wacker said that "many Americans' lifestyles still call for a pickup truck, if they're towing a landscaping trailer or a boat for the weekend or some ATVs. And our marketing messages resonate with those people even though what they're doing might be described as a personal use."

Toyota

The company replaced the original, eight-year-old Tundra with a redesigned, full-size version in early 2007, projecting sales of 200,000 units a year as the launch essentially completed Toyota's invasion of its last major U.S. vehicle segment. Tundra came close to 200,000 sales in its first year, and then Toyota invested about $800 million in a new plant in San Antonio to handle predicted growth.

But last year, sales dipped to about 137,000 Tundras. And so far this year, the projected total is about 74,000 units, according to Edmunds.com.

Naturally, such a breathtaking shortfall has called for some marketing adjustments even by the normally sure-footed Toyota brain trust. There have been several as the company introduces its 2010 Tundra series right now.

First, Higgins explained, Toyota is trying to equip the Tundras it builds at the sweet spot of option levels for the market. Among other things, that means increased output of the Double Cab version equipped for the new model year with a 4.6-liter V8 engine that offers 34 more horsepower than the 4.7-liter V8 it replaced in the 2009 Tundra. "With this version, we can compete more at the segment's core price points than before," Higgins said.

Second, Toyota truck marketing is going increasingly online even though pickup-truck buyers have been the least likely demographic to find there. "We're trying to get our message points a little lower in the shopping funnel where we might have greater efficiencies" in reaching buyers, Higgins said.

Third, the company will continue to rely greatly on event marketing. The Tundra Prove It! Tour gave thousands of people in the truck-buying demographic opportunities to try out the new Tundra over the last couple of years without having to go to a dealership. And Higgins said Toyota wants "to continue that." But the company is likely to include other models along with Tundra in future such events.

And, fourth, Toyota plans to continue its demonstration-based TV marketing. Over the past couple of years, that approach has had Tundra performing some mechanically amazing feats involving a high cliff. Look for the 2010 model to be promoted with the return of an ad first aired during the Super Bowl in which a Tundra actually tows 10,000 pounds up a very steep tower proceeding through a tunnel of fire.

"We still have the top-line objective of communicating Tundra's performance capability, and we think this is the best way of doing that," Higgins said. Competitors may be focusing more on specific features in part because Tundra has established its supremacy in the segment in areas such as fit and finish, he asserted.

"I'm not sure; we think we have that as brand equity," Higgins said. "Anyway, what we need to communicate about Tundra is 'presidential' issues and top-line capabilities."

Nissan

Nissan has always brought up the rear in this segment with its Titan line, a position on which it seems to be solidifying its hold. Edmunds.com projects that Titan will sell only 18,000 units for all of 2009, which would represent an 80 percent fall from its 2005 sales peak.

But Shahani said that "there's no way we can sit this out; we have to play the game." So Nissan is taking what he called "a very pragmatic approach to marketing [Titan] in this environment."

That strategy begins, he said, with an unwillingness to play "the deep-discounting incentive game that competitors play in this segment. It ultimately destroys value for the segment and the industry and the brand. We're not going to go crazy spending $8,000 or $9,000 on incentives per vehicle.

"That may give us a bump in the short term, but in terms of residual value, you're going to screw your customers. We'd rather let our share fall to the natural level of demand and still be profitable, because we're not sure how long this economic crisis is going to last, and we need to optimize our profits and our cash situation. This protects us by not having to use big incentives once we've built the vehicles."

So, on average so far this year, Shahani said, Titan is offering about $5,500 per vehicle in incentives while, he noted, the brand-new Ram has been putting as much as $6,000 apiece on the hood. "That gets us down to a competitive transaction price," he said. "We're not going to be the cheapest truck in the segment, but we're not going to be the most expensive either, given that we're a couple of years older than some of the newest entries."

Nissan also is focusing on the inherent value of Titan. For example, it is launching the 2010 Heavy Metal edition of the vehicle, which features a chrome billet grille, side rails, rearview mirrors and wheels for a package price of about $1,200 -- on separately valued components that would total about $2,500.

"That speaks value to the customer and allows the dealers to have a very strong message," Shahani said.

In advertising, he said, Titan's new theme is "Look closer." "It allows us to focus on ours versus competitive models, and consumers will find that our value proposition is outstanding," Shahani explained. "It underscores the much more pragmatic approach we need to take in this kind of economy."

Chrysler

Dodge truck marketers know that Ram is one of the best things the company has going for it in today's topsy-turvy environment for the corporation and the industry. Yet according to Edmunds.com, the new Ram line is on pace to sell about a quarter-million fewer units than at the nameplate's height in 2003, a projected 186,000 units in 2009.

"We have a game-changing pickup truck," Mark Spencer, senior manager of Dodge advertising, told AutoObserver last year. "We're now offering a genuine crew cab; that segment has migrated from single digits in 2002 to being half of the light-duty pickup market now. We also have more craftsmanship, comfort and convenience -- from [available] box-rail storage to in-floor storage bins and satellite TV and an interior that is second to none.

"And we've kept the basic big-rig muscular design that people wanted us to keep."

The Dodge Ram Challenge has been all about trying to highlight those attributes. Teams of firemen, cowboys, military personnel and construction workers -- each equipped with a stock 2009 Ram Crew 1500 -- competed against one another. RSA Films director Tony Scott, known for high-energy action-adventure movies, filmed the action for Ram's TV ads and for a series of webisodes.

But Wacker, of JWT/Team Detroit, is among those who believes that, in the current sales environment, truck buyers have moved beyond what she called "Mad Max things out in the desert."

"The customer has started not to differentiate among those things," she said. "Ram's launch was very much in the vein that Toyota was in, too."

Michelle Krebs:  is Editor-in-Chief of AutoObserver.com. Follow @AutoObserver on Twitter.