Nissan Tripped Up by Middling Marketing

Profits Drop for First Time in Eight Years as Sales Fall in Top Markets

By Jean Halliday

Published: May 07, 2007

DETROIT (AdAge.com) -- Nissan has lost its marketing magic. Nissan Motor Co. President-CEO Carlos Ghosn confessed at a recent Tokyo press conference that though the automaker's models are well-received by consumers, the Nissan and Infiniti names fall "somewhere in the middle of the pack" when it comes to brand strength. He seemed to be committing to a marketing push to solve the problem: "Building our brand power is critically important."

Indeed, brand perception is the differentiator when consumers select a Toyota or Honda over a Nissan, said Jesse Toprak, executive director-industry analysis at auto info site Edmunds.com. He said that because Nissan's image in recent years is more of sporty performance, the brand isn't as strong as the other two Japanese transplants.

And its marketing message, said Art Spinella, president of CNW Marketing Research, "doesn't seem to be getting across" to consumers.

Falling behind
It's a big turnabout for a company that staged one of the industry's most dramatic comebacks following near-death in the late 1990s. Nissan posted its first profit drop in eight years for the fiscal year ended March 31 and saw vehicles sales fall in its two biggest markets: 4% to just over a million units in the U.S., and 12% to 740,000 units in Japan compared to the prior period.

Though it's still in the black, Nissan's profits were off 11% globally for the year and more than 50% in the last quarter.

Mr. Ghosn, who orchestrated the turnaround, blamed Nissan's current situation on lower prices, higher incentive spending and higher raw-material costs that could not be passed along to buyers.

The automaker got "an early wake-up call" from its latest financial results and feels a sense of urgency to "get past this bump," he said at the press conference. He predicted the current fiscal year will be better for Nissan as it readies launches for 11 products globally and pushes the Infiniti brand into China and the Ukraine.

Tough time for gas guzzlers
Like other carmakers, Nissan and Infiniti have been hurt by slowing interest in big SUVs, Mr. Torak said. In April, Nissan had its highest average incentives on the Armada SUV ($4,494 per unit), Murano crossover ($4,449) and Infiniti FX35 crossover ($4,392), Edmunds data show. Nissan's Altima hybrid had no incentives in April and the Versa entry-level small car averaged $262 per unit. But in the past 12 months, the average incentive on Nissan and Infiniti models was roughly $2,200 a vehicle -- $153 less than the industry average.

Lincoln Merrihew, senior VP of TNS Automotive, cites a disconnect between Nissan's U.S. advertising, themed "Shift 2.0" and introduced last summer, and its new models, including the Versa, redone Sentra, redesigned Quest minivan and Maxima sedan. TBWA/Chiat/Day, Playa del Rey, Calif., handles both Nissan and Infiniti.


While the Versa and Sentra are the right cars for times of higher gas prices, they 'aren't as earth-shattering' as the Z sports car or last-generation Altima sedan (2008 model shown above), said Lincoln Merrihew, senior VP of TNS Automotive.

Performance perception
Nissan spent $167 million in measured media (sans outdoor) in January and February of this year and $943 million in calendar 2006, a drop of 7.9% over 2005, according to TNS Media Intelligence. But Mr. Spinella said that when Nissan's ad message does break through with consumers, their takeaway is mainly about performance.

CNW's consumer feedback on the evolved campaign found that only 19% of men and 18% of women could correctly identify the Nissan brand and the 2.0 tag. Before seeing the ads, 14% of men and almost 17% of women said they'd consider buying a Nissan. After seeing the ads, 16% of men and the same share of females said they'd consider a Nissan.

"The products are probably better than the perception," Mr. Spinella said. "But perceptions rule."