When Mercedes and BMW entered the U.S. market and established the luxury segment of the automobile market, Cadillac and Lincoln were left with an aging customer base happy with the familiar big car soft ride experience. As time went on Cadillac and Lincoln customers liked the “look” of the smaller Mercedes and BMW models, but did not want to pay the premium prices for those brands. This set the stage for the Lexus brand to promote that they had about the same features and benefits as Mercedes and BMW, but at a price just slightly more than Cadillac and Lincoln. Obviously, this strategy worked and they created a new slice in the luxury car segment. The Infiniti brand followed Lexus into this subset, which today encompasses a variety of other new brands now successfully competing with Lexus and Infiniti.
Lincoln almost gave up competing, but are back now as the Lincoln Car Company trying to claw their way back into this lucrative segment of the auto market. Unfortunately, along with Cadillac, the Lincoln brand is still perceived as nowhere near as cool, nor having the quality of the current luxury market leaders - Mercedes, BMW, and Audi.
Cadillac has attempted to rebrand itself with the recent ATS and CTS models developed to compete with the market leaders. However, after the initial hype these models have now also faded under the Cadillac umbrella with sales declines this year. Pricing still remains the issue as many previous Cadillac owners aren’t willing to pay the higher asking prices for these new models, and not enough Mercedes, BMW, and Audi loyalists are willing to consider the Cadillac brands.
GM has hired a new Cadillac brand manager who was instrumental in growing the Infiniti brand to help rebuild Cadillac’s image. His initial plans are to reduce the number of underperforming Cadillac dealerships, and develop yet another new compact crossover vehicle and a new smaller utility vehicle. While admirable in concept, the problems with the overall Cadillac brand image are what really need to be fixed, if they can be?
This is another classic example of perception in Marketing. Marketing is the battle for a share of the customer’s mind. Brands exist in the mind. The mind is like a dripping sponge and the only way anything new can get in is to displace what already exists. Obviously, the Cadillac brand image is still poorly perceived as compared to Mercedes, BMW, and Audi.
These brands continue to reinforce and enhance their value propositions, especially Audi. Until such time as Cadillac can rebrand itself it will continue to lose share of mind. It might be a better idea to abandon the Cadillac brand and take on a new fresh brand name like Toyota did with Lexus, and Nissan did with Infiniti.
Ford is trying this with their new Lincoln Car Company division, while still holding on to the Lincoln brand. It is doubtful if this attempt at rebranding will work either.