How a little love helped Subaru make more money

by Nigel Hollis | December 04, 2017

In this Bloomberg article Subaru of America’s CEO, Tom Doll, remembers how in 2005 the company “were getting the tar kicked out of us”. His solution was to play a different game from the big automakers and it has served the brand well, helping to boost sales by a factor or three with industry-leading margins.

Of course, it helped that Subaru was different from the competition to start. Its focus on all-wheel drive was different, and the Outback launched in 1995 might be credited with setting off Americans desire to own crossover vehicles. More than that, the company’s marketing in the late 90s was notable for its focus on core target buyers willing to pay a premium for all-wheel drive. When it discovered lesbians ranked alongside teachers, healthcare professionals, IT professionals and outdoors lovers as people most likely to buy a Subaru, the company became one of the first to openly advertise to the gay community.

This non-conformist approach helped Subaru’s sales grow by over 50 percent but by 2005 other automakers offered similar vehicles and sales and share had plateaued. As Doll states in the Bloomberg article,

“I realized we couldn’t compete with these bigger companies at their game. We had to come at it in a completely different way.”

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His solution?  In 2007 Subaru cut its prices (which proved to lucky move when the Great Recession hit a year later). A program to improve the dealership experience was implemented. And Subaru’s new agency, Carmichael Lynch, started work on advertising that would focus on the love Subaru customers have for their cars. “Love. It’s What Makes a Subaru, A Subaru” launched the next year. In 2010 the “Dog Tested. Dog Approved.” ads started appearing as part of the Love campaign. Instead of focusing on poignant stories of owner’s lives, these ads showed dogs enjoying the experience of driving Subarus. Like the campaign in general the ads studiously avoided talking about features, performance or price.

With car sales in general being hammered by the onset of the Recession Subaru’s sales volume initially remained flat from 2008 to 2009, although Subaru’s market share improved. From 2009 onwards sales and market share started to improve and, as more and more drivers started to look to buy crossovers or SUVs, Subaru was well-positioned to ride the post-recession wave. The brand has grown strongly since, while returning some of the highest profit margins in the industry.

In terms of its image Subaru has always stood out as being different but what is notable is the way the growth its attitudinal equity (as measured by BrandZ’s Power Score) has led increases in its market share. This is indicative of people being predisposed to buy a Subaru even if they are not ready act on that predisposition. As a result, Subaru is notable in the industry for having a very tight supply of vehicles and offering incentives that are less than a third of the industry average.

To my mind, the Subaru story is a classic example of how a brand can grow and make a good margin by playing a different game, but maybe I am wrong. What do you think? Please share your thoughts.

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  1. Jono Smith, December 04, 2017
    I'd say having a strong social purpose and CSR program has helped, as well: https://www.subaru.com/love-promise.html

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