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Old 10-27-2002, 22:02   #1 (permalink)
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Volvo faces performance marketing challenge

By Mark Rechtin
Automotive News / October 28, 2002
Volvo's challenge
Percentage of Volvo owners who bought another new Volvo
1998: 40%
1999: 45
2000: 32
2001: 35
2002: 39
Source: Strategic Vision market research surveys

LOS ANGELES -- It's a dilemma: Change your image with the possibility of broadening your customer base but add the possibility of alienating core customers.

That's the challenge Volvo faces with next spring's launch of the S60R sedan and V70R wagon.

Both are more than just high-powered, turbocharged models. They have all-wheel drive and a design that puts them on a par with the BMW M3, engineers claim.

That could draw new drivers to the brand and put off the conservative types who equate Volvo only with safety. Combining a safety image with performance is something that Mercedes-Benz has accomplished.

"A vehicle with 300 horsepower and all-wheel drive is not only a great driving machine but a great safety machine as well," said Vic Doolan, president of Volvo Cars of North America. "There is no harm in Volvo having one of the fastest cars on the road."

Doolan said the North American marketing plan will be subtle, talking about the R models' performance as an added value. Comparing it with competitors such as the M3 "is not rewarding. That will be for the journalists to do," Doolan said.

Dual focus

Hans Olov-Olsson, president of Volvo Car Corp., thinks Volvo can market the cars with a performance and safety message. "Desirability is something that fits in with performance. When you sell something like the S60R or the 850 T-5, it tells the story of performance, combined with design and safety, so there are no compromises," Olsson said.

Said Hans Folkesson, Volvo Car Corp. senior vice president of r&d: "We don't want to be a boring company. If we were only about safety, we could restrict our cars to 90 kilometers an hour, but who would buy them? We don't have to hide behind a boxy look. We can have handling that is extremely good and still have the basic core of safety."

Folkesson said that many European luxury consumers have a Volvo wagon as the family car and a Porsche 911 as the fun car. In selling the S60R, Volvo hopes to persuade people to have a second Volvo in the garage. Or else, the V70R might be the only car they own, Folkesson said.

Because the R models will be limited to a few thousand vehicles, Volvo purists' fears could be calmed.

Earlier this year, there were grumblings that the automaker's "ReVolvolution" ads were too whimsical. Those ads quietly went away, replaced by more familiar safety ads with voiceovers from members of the "Volvo Saved My Life" club.

According to research by Strategic Vision of Vista, Calif., 45 percent of Volvo owners who bought their vehicle new purchased another one in 1999. Although that conversion rate dropped to 32 percent in 2000, it rose to 35 percent last year and is continuing to improve.

"They are a brand in transition," said Dan Gorrell, Strategic Vision vice president. "I do not believe their advertising has been on target for the last year or so. But they appear to be remedying that."

At the same time, Volvo cannot move down the performance autobahn too cautiously lest it be labeled a pretender compared with the competition, said Steve Saxty, head of the automotive practice for New York-based con******cy FutureBrand.

In addition to the well-known BMW M brand and Mercedes-Benz's affiliation with AMG, there also are the Lexus L-Tuned models and Audi's S-badged vehicles. Premier Automotive Group stablemate Jaguar has R models. And Cadillac is preparing high-zoot V-Spec models.

"To do it properly," Saxty said, "the proposition is that there is substance behind the name. You have to make sure people really understand it's not just a bag of parts they buy as an accessories package. Volvo needs its type R to be more than a badge. It needs to be a special division within the company that does exclusive cars as well as some high-performance police cars that makes them more than just a turbo-special."

Either that, or Volvo could dip into PAG's shared engineering resources to find common ways to boost performance.

"I can think of nothing more exciting than PAG taking Jaguar Formula 1 parts and passing them on to all the brands as 'Premier Performance,'" Saxty said. "That wouldn't just be marketing but a credible sports car line."
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