Monday, September 10, 2007

Car Ad Evolution, Part IV: 1990's price equation

Sometime in the 1990's, Price started to take a very important position in car ads. I believe this is partly due to the arrival of the imports: high quality cars manufactured in Asia. At first these cars had a hard time adjusting to the American market. They were not very popular with consumers in North America. Countries like Japan and Korea invested millions of dollars in research and development, which resulted in the cars that we know today: reliable, high quality cars. This started to put pressure on the American car producers. This and many other factors starting eating away at their market share and sales started to decrease.

In order to compete, a company can choose to go down many roads. You can lower your prices, you can increase your quality, you can become a niche market player or you can try an offer the best "value" proposition between all the competitors in your market: a combination of good price-good quality-good image. Competition in the car industry has put a lot of pressure in the price component of the mix, which is one of the many reasons why American car producers are struggling today.
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